Manufacturing overhead is all the costs that a factory incurs, other than the variable costs needed to build products, including direct labor and direct materials.
Examples of costs which are included within the manufacturing overhead group are:
Property taxes on the production facility
Depreciation on equipment employed in the production procedure
Salaries of maintenance staff
Rent on the factory building
Salaries of the materials management personnel
Salaries of manufacturing managers
Supplies not directly related to products (such as
Salaries of the quality control personnel
Wages of building janitorial employees
Utilities for the factory
Applied manufacturing overhead refers to manufacturing
overhead costs applied to units of a product throughout a specific period. It
is calculated using a formula; in most cases, you multiply the total
manufacturing costs or direct labor costs, including materials and worker pay,
by the predetermined application or overhead rate.
You likely have the overhead
rate established, however in case not, divide the total manufacturing overhead
costs from the estimated total amount of direct labor costs, direct labor hours
or machine hours.