What is meant by Overhead cost planning?
The term "overhead cost planning" refers to the process of capturing, allocating, and monitoring overhead costs that cannot be directly assigned to a specific product or project. Overhead costs are general operating expenses such as administrative costs, rent, insurance, and other indirect costs that need to be distributed across various areas or products of a business.
Typical Software Functions in the Area of "Overhead Cost Planning":
- Cost Planning and Allocation: Creating budgets for overhead costs and allocating these costs across different cost centers or projects.
- Cost Analysis: Analyzing overhead costs to identify potential savings and monitor deviations from planned costs.
- Cost Tracking: Monitoring and tracking actual overhead costs compared to planned values.
- Reporting: Generating reports and dashboards to illustrate overhead cost trends and support decision-making.
- Cost Assignment: Functions to assign overhead costs based on various allocation bases such as employee hours, production volume, or space usage.
- Forecasting and Budgeting: Forecasting future overhead costs and creating budgets for better financial planning.
- Integration with Accounting Systems: Linking overhead cost planning with accounting and financial systems to ensure consistency and accuracy of financial data.
- Creation of Cost Centers: Defining and managing cost centers for targeted tracking and monitoring of overhead costs.