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Four unavoidable examples of
manufacturing overhead
What are overheads?
Manufacturing Overhead is the indirect factory related cost incurred by a manufacturer at the time of production. Manufacturing of products comes with a lot of other unavoidable expenses that might not have been calculated before.
What to do with Manufacturing
overhead ?
Manufacturing overheads are often disposed off to adjust them in the statement. However, before trying to understand how to dispose off the overheads, you must be able to identify them.
Find the list of some most common
examples of manufacturing overhead
costs in this presentation.
Indirect Labor
Indirect labor refers to any labor that does not directly relate to the manufacture of a product but is necessary to the manufacturing process.
For example: i. wages paid to workers employed to inspect
finished productsii. wages paid to manufacturing supervisorsiii. janitorial staff at a manufacturing facility
Utilities
Utilities are not categorized under direct labor or direct materials. That is he reason it finds its place in manufacturing overhead costs.
The most indispensable examples are: water, sewer, electricity, and phone and internet service.
Moreover, purchasing and maintaining computer systems in the process of production is also classified as a part of manufacturing overhead.
Supplies
Supplies during the production which have not been counted as directly related to production are classified as overhead.
Fuel to power forklifts, or grease needed to keep machines working properly are common examples of overhead supplies.
Moreover, the cost of any replacement parts needed to repair or maintain manufacturing equipment gets included in manufacturing overhead cost.
The list of manufacturing overhead costs in inexhaustible as many expenses during manufacturing process are unanticipated. Some very common manufaturing overhead costs include the following items: Things to maintain a safe working environment. Property Insurance Warehouse or manufacturing equipment Taxes related to the manufacturing process.
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