ECONOMICS

Detailed explanation-1: -What Costs Does Manufacturing Overhead Include? Also known as production overhead, factory overhead, or factory burden, manufacturing overhead refers to all of the indirect costs required to operate your factory. These might include: Indirect labor, such as maintenance and cleaning personnel.

Detailed explanation-2: -To calculate manufacturing overhead, you need to add all the indirect factory-related expenses incurred in manufacturing a product. This includes the costs of indirect materials, indirect labor, machine repairs, depreciation, factory supplies, insurance, electricity and more.

Detailed explanation-3: -More specifically, factory overhead includes: Depreciation of equipment and factory facilities. Rent, property taxes, insurance, and utilities. Employment costs for supervisors, maintenance and quality control staff, and any other on-site employees who aren’t physically making signs.

Detailed explanation-4: -Direct labor costs are included in the direct cost or prime cost. Indirect labor costs are included in overheads, such as administrative overhead, factory overheads, or sales and distribution overhead.

Detailed explanation-5: -Factory overhead is the costs incurred during the manufacturing process, not including the costs of direct labor and direct materials.