Overhead Costs
FinanceDefinition
Expenses that are not directly tied to a specific product or service but necessary for the general operation of a business.
Detailed Description
Overhead costs refer to the ongoing expenses of operating a business that cannot be directly attributed to creating a product or service. These costs include expenses such as rent, utilities, insurance, and administrative salaries. In an ERP system, understanding and managing overhead costs is crucial for accurate financial reporting and decision-making.
Key Features
- Integration with budgeting and forecasting modules
- Reporting and analysis tools for cost management
- Tracking and categorization of indirect costs
Common Modules
Budgeting and Forecasting
Facilitates planning and predicting financial needs, helping to allocate budgets for overhead expenses.
Financial Management
Manages accounting, budgeting, and financial reporting, providing insights into overhead costs.
Popular Implementations
Allocating Overhead Costs in Manufacturing
A manufacturing company leverages ERP systems to allocate overhead costs accurately to various production units, helping in precise product costing.