Question:

What is the overhead component of a product cost?

Answer:

Overhead costs for a business are the cost of resources used by an organization just to maintain its existence. The overhead component of a product cost could include things like payment of rent on the space a business occupies and cost of utilities.

More Info:

Management Overhead

In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing. This acquisition cost may be the sum of the cost of production as incurred by the original producer, and further costs of transaction as incurred by the acquirer over and above the price paid to the producer. Usually, the price also includes a mark-up for profit over the cost of production.

More generalized in the field of economics, cost is a metric that is totaling up as a result of a process or as a differential for the result of a decision. Hence cost is the metric used in the standard modeling paradigm applied to economic processes.

Operating costs are the expenses which are related to the operation of a business, or to the operation of a device, component, piece of equipment or facility. They are the cost of resources used by an organization just to maintain its existence.

For a commercial enterprise, operating costs fall into two broad categories:

In economics, economic rent is an analytic term for the portion of income paid to a factor of production in excess of its opportunity cost. Economic rent is unrelated to and should not be confused with the more common term rent; a payment for the temporary use of a good or property.

Economic rent (which in production analysis is always seen as a cost of inputs) is affected by any production only minimally, if at all. Economic rent is a fact of natural or contrived exclusivity. For labor, economic rent could be created by the existence of guilds or labor unions (e.g. higher pay for workers, where political action creates a scarcity of such workers); for a produced commodity, economic rent may also be due to the legal ownership of a patent (a politically enforced right to the use of a process or ingredient); for operating licenses, it is the cost of permits and licenses that are politically controlled as to their number regardless of competence and willingness of those who wish to compete in the area being licensed; for most other production including agriculture, economic rent is due to scarcity of natural resources (i.e., land). When economic rent is privatized, the recipient of economic rent is referred to as a rentier.

Technology Internet

Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.

In contrast to financial accountancy information, management accounting information is:

Business

Accountancy (UK), or accounting (US), is the production of financial records about an organization. Accountancy generally produces financial statements that show in money terms the economic resources under the control of management; selecting information that is relevant and representing it faithfully. The principles of accountancy are applied to accounting, bookkeeping, and auditing.

Many tedious accounting practices have been simplified with the help of computer software. Enterprise resource planning (ERP) software provides a comprehensive, centralized, integrated source of information that companies can use to manage all major business processes, from purchasing to manufacturing to human resources. This software can replace up to 200 individual software programs that were previously used. Computer integrated manufacturing allows products to be made and completely untouched by human hands and can increase production by having less errors in manufacturing process. Computers have reduced the cost of accumulating, storing, and reporting managerial accounting information and have made it possible to produce a more detailed account of all data that is entered into any given system. Computers have changed business to business interaction through e-commerce. Rather than dealing with multiple companies to purchase products a business can purchase a product at a less expensive price and take out the third party and vastly reduces expenses companies once accrued. Inter-organizational information system enable suppliers and businesses to be connected at all times. When a company is low on a product the supplier will be notified and fulfill an order immediately which eliminates the need for someone to do inventory, fill out the proper documents, send them out and wait for their products.

Health Medical Pharma Business Finance
News:


Related Websites:


Terms of service | About
9