Final answer:
The budgeted indirect-cost rate is calculated at the beginning of the year, using estimated indirect costs and cost drivers to allocate overhead during the year. This contrasts with GDP estimates, which are updated on a quarterly basis as new information comes in.
Step-by-step explanation:
The budgeted indirect-cost rate is typically calculated at the beginning of the year. This rate is used to allocate indirect costs to different cost objects throughout the year. The calculation is based on the estimated costs and an estimation of how cost drivers will be utilized over the coming year. For instance, a company might estimate indirect costs, such as utilities, maintenance, and administrative salaries, and divide this by the expected machine hours or labor hours, arriving at a rate per hour. This rate then gets applied as indirect costs to products or services based on their actual use of the cost drivers.
Unlike the budgeted indirect-cost rate, which is set in advance, GDP estimates are calculated on a quarterly basis (every three months) by the Bureau of Economic Analysis (BEA), and these estimates are then 'annualized'. Moreover, as additional information becomes available, the BEA updates and revises these GDP estimates throughout the year. This demonstrates the contrasting approaches to financial estimation and reporting used in budgeting versus national economic measurements.