Departmental Rate

DEFINITION of 'Departmental Rate '

The overhead expense rate for every department in a factory production process. The departmental rate is different for every stage of the production process when various departments perform selected steps to complete the final process. By breaking up overhead for individual business sections rather than having a company-wide rate, management can assess corporate inefficiencies more accurately.

BREAKING DOWN 'Departmental Rate '

The departmental rate is specific to every segregated step in the entire process. For example, if a company makes bread, different departmental rates could be used for the actual production/manufacturing line and the bagging process.

RELATED TERMS
  1. Applied Overhead

    A type of overhead that is recorded under the cost-accounting ...
  2. Overhead Rate

    In managerial accounting, a cost added on to the direct costs ...
  3. Budget Committee

    A group of people that creates and maintains fiscal responsibility ...
  4. Production Volume Variance

    The amount of fixed overhead costs that are not allocated to ...
  5. Overhead

    An accounting term that refers to all ongoing business expenses ...
  6. Variable Overhead

    The indirect costs of operating a business that fluctuate somewhat ...
Related Articles
  1. Markets

    What's Overhead?

    Overhead is an accounting term used for expenses that have to be paid even if the business doesn’t earn any revenue. The business would not be able to operate without paying its overhead expenses, ...
  2. Retirement

    Ready to Retire? Here's How to Sell and Close Your Small Business

    Learn the essential steps to prepare to sell your business with the best possible outcome, a secure retirement for you and your family.
  3. Trading

    Uncovering The Securities Firm

    Learn about the various departments of a securities firm and the professionals who make it work.
  4. Markets

    Is the Payment Processing Industry Evolving? (PYPL, TGT)

    Learn about the many changes in commerce and payment systems that are happening in the rapidly evolving payment processing industry.
  5. Financial Advisor

    How to Create a New Financial Product in 10 Steps

    The 10 steps outlined here are essential to the creation of a new financial product.
  6. ETFs & Mutual Funds

    Choose A Fund With A Winning Manager

    We break down the key components of analyzing a fund manager's performance so you can find a winner.
  7. Financial Advisor

    What Does Corporate Finance Do?

    Corporate finance is the subset of finance that involves how corporations use leverage to fund their operations and capital purchases.
  8. Personal Finance

    What is Zero-Based Budgeting?

    Zero-based budgeting starts from a "zero base" and then every function within an organization is analyzed for its needs and costs.
  9. Trading

    Lead The Charge With Product Development

    If you like to keep your finger on the pulse of the market, this could be the career for you.
  10. Personal Finance

    Get Approved for a Mortgage in an Hour

    The traditional mortgage approval process takes 2-4 weeks, but tech companies have reduced the time to get approved for a mortgage to less than one hour.
RELATED FAQS
  1. How does fixed overhead differ from varied overhead?

    Learn about overhead costs and the two types of overhead costs, and discover the difference between fixed and variable overhead ... Read Answer >>
  2. How do some contra account types reduce book value?

    Look at a brief example of how cost accounting treats overhead expenses, how those expenses are different from direct labor ... Read Answer >>
  3. How is overhead distributed through total absorption costing?

    Learn how overhead is distributed through total absorption costing, and the steps required for a company to determine its ... Read Answer >>
  4. Does gross profit include labor and overhead costs?

    Find out how companies treat different kinds of labor costs when calculating gross profit and whether overhead costs impact ... Read Answer >>
  5. How does quantifying fixed overhead volume variance show whether a company is profitable ...

    Find out why some fundamental analysts look at fixed overhead volume variance as an indicator of company profitability or ... Read Answer >>
  6. In what instances does overhead qualify for certain tax allowances?

    Find out about instances in which overhead expenses qualify for tax allowances, including some common examples of tax-deductible ... Read Answer >>
Hot Definitions
  1. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  2. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  3. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  4. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  5. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  6. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
Trading Center