Overhead Budget

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Amounts of labor and overhead expected to be consumed are based on the production budget.
These amounts are also used to forecast staffing levels.
Overhead estimates tie back to estimated capital budgeting expenditures for capacity.

Costs may be broken out into fixed and variable components.

If activity-based costing is used for budgeting purposes, levels of activities are forecasted based on anticipated production, and overhead is estimated for each activity.

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