Factory overhead

FACTORY OVERHEAD

Factory Overhead is generally defined as indirect labour, Indirect material and all other factory expenses that cannot conveniently be identified with nor charged directly to specific job or products or final cost objectives, such as governemnent contracts. Other terms used for factory overhead are factory burden, manufacturing expense, manufacturing overhead, factory expense, and indirect manufacturing cost.

Factory overhead, also called manufacturing overhead or factory burden, is the total cost involved in operating all production facilities of a manufacturing business. It generally applies to indirect labor and indirect cost, it also includes all costs involved in manufacturing with the exception of the cost of raw materials and direct labor. Factory overhead also includes certain costs such as quality assurance costs, cleanup costs, and property insurance premiums.