Predetermined Overhead Rate Semi Variable Costs Overhead Expense
Reduction Absorption Cost Accounting Overhead, defined in as
those ongoing expenses of running a business that do not
directly relate to its core operations, is ever present in the
mind of accountants. The overhead definition includes the costs
that are necessary for the business to continue operations, but
that do not actually generate profits for the business. Overhead
examples include rent payments, utility bills, advertising
expenses, insurance costs, interest payments, legal fees, taxes,
and other expenses. Overhead may also be called overhead costs,
overhead expenses, manufacturing overhead costs, factory
overhead, or burden. Overhead Variance Overhead variance refers
to the difference between actual overhead and applied overhead.
Overhead variance can only be computed after the actual overhead
costs for the period are known. Overhead is applied based on a
predetermined rate and a cost driver. This is essentially a way
of estimating overhe