Analyze the impact of overhead and how cost centers are determined. Please provide a solution to this problem in at least 400 words.© BrainMass Inc. brainmass.com June 4, 2020, 12:16 am ad1c9bdddf
Analyze the impact of overhead and how cost centers are determined.
Meaning of Overhead:
The expenses incurred in the organization which are not directly attributable to any business activity are called overhead. Overhead can be manufacturing overhead, administrative overhead and selling and distribution overhead. Example: rent of factory and office building, insurance, utilities, supervisor's salary etc.
Impact of overhead: The overhead incurred in the organization should be allocated to the various products manufactured by the company. In the traditional cost system, the overhead is allocated to the products either on the basis of direct labor hours or machine hours or on the basis ...
This solution helps analyze the impact of overhead and how cost centers are determined. Concepts discussed are the meaning of overhead, impact of overhead, and establishment of cost centers. The explanation is given in 429 words.