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Definition of Factory overhead
All the costs incurred during the manufacturing process, minus the
the amount of overhead that has been assigned to Work in Process Inventory as a result of productive activity; credits for this amount are to an overhead account
That portion of total overhead costs which remains constant in size
the difference between the total actual fixed overhead and budgeted fixed overhead;
see volume variance
A general term referring to period costs, such as selling, administration and financial expenses.
a credit balance in the overhead account
Any cost other than a direct cost – may refer to an indirect production cost and/or to a non-production expense.
any factory or production cost that is indirect to
The process of spreading production overhead equitably over the volume of production of goods or services.
see predetermined overhead rate
overhead generally refers to indirect, in contrast to direct,
the difference between total budgeted overhead at actual hours and total budgeted
The rate (often expressed per hour) applied to the time taken to produce a product/service, used to allocate production overheads to particular products/services based on the time taken. May be calculated on a business-wide or cost centre basis.
the difference between total actual overhead and total budgeted overhead at actual
an estimated constant charge per unit of activity used to assign overhead cost to production or services of the period; it is calculated by dividing total budgeted annual overhead at a selected level of volume or activity by that selected measure of volume or activity; it is also the standard overhead application rate
A general term referring to indirect costs.
standard overhead application rate
a predetermined overhead rate used in a standard cost system; it can be a separate variable or fixed rate or a combined overhead rate
total overhead variance
the difference between total actual overhead and total applied overhead; it is the amount of underapplied or overapplied overhead
a debit balance in the overhead account at the end of a period; when the applied overhead amount is less than the actual overhead that was incurred
variable overhead efficiency variance
the difference between budgeted variable overhead based on actual input activity and variable overhead applied to production
variable overhead spending variance
the difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity
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