What are the overhead costs. Cost Accounting for Factory Overhead, Actual and Estimated Costs Allocated from understanding to cost classification.
Table of contents :
- Understanding Overhead Cost
- Factory Overhead Cost Classification
- Cost of auxiliary materials
- Indirect labor costs
- Repair and maintenance costs
- Alokas method
- direct i (direct allocation method)
- Case in point: Direct Allocation Method
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What are the overhead costs.
When going to manage a financial budget each month, have you ever set aside a little money to be able to anticipate unexpected expenses? If you’ve ever done this, then you’re the kind of person who always ‘stands up for an umbrella before it rains’.
Currently, there are many people who can manage their financial budgets in great detail.
They also usually have divided their finances into expense categories that they very routinely do every month, for example, the budget for food, gasoline, to the budget for mortgage and car payments.
Unfortunately, not many people have included the “unexpected expense” category in their budget.
In fact, budgeting for unexpected costs in finances is very important in an effort to keep your financial condition very stable.
Preparation of unpredictable expenditure budgets is not only important for the preparation of household budgets, but also very important for companies to do.
The right term to describe the unexpected expenses of a company is factory overhead costs.
Factory overhead costs are production costs that will not be included in the cost of raw materials or direct labor costs.
Factory overhead costs usually arise from the costs that must be incurred for the use of additional materials, indirect labor costs, control of production machines, taxes, insurance, to additional facilities required in the production process.
Factory Overhead Cost Classification
Before determining a factory overhead budget, we must be able to classify a factory overhead cost first.
With this classification, it will be easier for us to determine how much budget we will need to set aside as a factory overhead budget according to the business in our company. Factory overhead costs can be classified into 3 krite
Classification of factory overhead costs Based on their nature, factory overhead costs can be divided into:
a. Cost of auxiliary materials
Auxiliary materials that will be referred to in this case are materials that will not be part of the production output as well as materials whose value is very small relative to the price of the whole product.
b. Indirect labor costs
Indirect labor, which is referred to in factory overhead costs, is where the company’s workers whose wages cannot be directly calculated on a product.
c. Repair and maintenance costs
Repair and maintenance costs which will be referred to in factory overhead costs are the cost of spare parts (spare parts), the cost of consumables (factory supplies),
And also the price of services that the company needs to pay for the purposes of repair and maintenance of production machines, vehicles, or other company tools.
