What is a Pool Rate?

A pool rate is the application rate used to assign the overhead costs in a cost pool to cost objects. It is calculated by dividing the aggregate cost total in a cost pool by the cost driver assigned to that pool. If you are storing overhead costs in a number of cost pools, then there will be a separate pool rate for each one.

Example of a Pool Rate Calculation

A factory overhead cost pool contains a total of $100,000 of factory overhead costs. These costs are assigned to units produced based on the amount of machine time consumed by each unit. The factory has 10,000 hours of practical machine hour capacity available, so the pool rate is calculated as follows:

$100,000 Factory overhead cost pool ÷ 10,000 Hours of machine hour capacity

= $10 Pool rate per hour of machine time used