If a company uses a predetermined overhead rate, actual manufacturing overhead costs of a period will be recorded in the Manufacturing Overhead account and will be recorded on the job cost sheets.

Predetermined Overhead Rate

A rate set in advance used to allocate manufacturing overhead to products based on a particular activity base such as machine hours or direct labor hours.

Manufacturing Overhead

All indirect costs related to the manufacturing process, such as indirect labor, maintenance, and utilities, that cannot be directly traced to specific products.

Job Cost Sheets

Detailed records that document the costs associated with a specific job or project.