DEFINITION of 'Applied Overhead'

A type of overhead that is recorded under the cost-accounting method. Applied overhead is a fixed charged to a specific production job or department within a company. Applied overhead stands in contrast to general overhead, such as utilities or rent. Other forms of applied overhead include depreciation and insurance.

BREAKING DOWN 'Applied Overhead'

Applied overhead is usually allocated out to various departments according to a specific formula. Hence, a certain amount of overhead is therefore applied to a given department, such as marketing. The percentage of overhead that is applied to a given department may or may not correlate to the actual amount of overhead that was incurred by that department.

RELATED TERMS
  1. Overhead

    An accounting term that refers to all ongoing business expenses ...
  2. Overhead Rate

    In managerial accounting, a cost added on to the direct costs ...
  3. Underapplied Overhead

    An accounting record in cost accounting where the overhead costs ...
  4. Variable Overhead

    The indirect costs of operating a business that fluctuate somewhat ...
  5. Variable Overhead Spending Variance

    The difference between actual variable overhead based on costs ...
  6. Production Volume Variance

    The amount of fixed overhead costs that are not allocated to ...
Related Articles
  1. Small Business

    What's Overhead?

    Overhead is an accounting term used for expenses that have to be paid even if the business doesn’t earn any revenue. The business would not be able to operate without paying its overhead expenses, ...
  2. Investing

    What is the Breakeven Point?

    In general, when gains or revenue earned equals the money spent to earn the gains or revenue, you’ve hit the breakeven point.
  3. Investing

    In The Week Ahead: Market Reaches Crucial Decision Point

    The major U.S. stock indices finished last week essentially unchanged, on the heels of back-to-back positive weeks, as the benchmark S&P 500 ran into a wall of formidable overhead resistance. ...
  4. Investing

    Gross, Operating and Net Profit Margins

    A company’s income statement includes the company’s gross, operating and net profits.
  5. Insurance

    Disability Insurance For Business Owners

    If you become injured and no longer able to work, would your business survive?
  6. Small Business

    What is the Burn Rate?

    Burn rate is the rate at which a startup uses venture capital to pay overhead costs before it generates a positive cash flow.
  7. Investing

    What is Absorption Costing?

    Absorption costing is an accounting method primarily used in manufacturing. In absorption costing, the cost of a manufactured product includes the direct costs plus an apportioned share of the ...
  8. Small Business

    Uncovering The Securities Firm

    Learn about the various departments of a securities firm and the professionals who make it work.
  9. Investing

    In The Week Ahead: 3 Charts Predict Stocks Are Headed For A Pullback

    For the second consecutive week, the four major U.S. stock indices finished essentially unchanged. This recent sideways action leaves the S&P 500, Dow Jones Industrial Average and Russell 20 ...
  10. Financial Advisor

    Broker-Dealer Industry 101: The Landscape

    Independent broker-dealers are a great choice for experienced, self-starter planners who have established practices.
RELATED FAQS
  1. How does fixed overhead differ from varied overhead?

    Learn about overhead costs and the two types of overhead costs, and discover the difference between fixed and variable overhead ... Read Answer >>
  2. How do some contra account types reduce book value?

    Look at a brief example of how cost accounting treats overhead expenses, how those expenses are different from direct labor ... Read Answer >>
  3. How is overhead distributed through total absorption costing?

    Learn how overhead is distributed through total absorption costing, and the steps required for a company to determine its ... Read Answer >>
  4. How does quantifying fixed overhead volume variance show whether a company is profitable ...

    Find out why some fundamental analysts look at fixed overhead volume variance as an indicator of company profitability or ... Read Answer >>
  5. Does gross profit include labor and overhead costs?

    Find out how companies treat different kinds of labor costs when calculating gross profit and whether overhead costs impact ... Read Answer >>
  6. In what instances does overhead qualify for certain tax allowances?

    Find out about instances in which overhead expenses qualify for tax allowances, including some common examples of tax-deductible ... Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center