Applied Overhead

AAA

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.

INVESTOPEDIA EXPLAINS '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. Underapplied Overhead

    An accounting record in cost accounting where the overhead costs ...
  2. Activity Cost Driver

    A factor that influences or contributes to the expense of certain ...
  3. Accounting

    The systematic and comprehensive recording of financial transactions ...
  4. Accounting Method

    The method by which income and expenses are reported for taxation ...
  5. Fixed Cost

    A cost that does not change with an increase or decrease in the ...
  6. Overhead

    An accounting term that refers to all ongoing business expenses ...
Related Articles
  1. Earnings Power Drives Stocks
    Markets

    Earnings Power Drives Stocks

  2. Trademarks Of A Takeover Target
    Bonds & Fixed Income

    Trademarks Of A Takeover Target

  3. What are some examples of how cash flows ...
    Personal Finance

    What are some examples of how cash flows ...

  4. What is the difference between cash ...
    Fundamental Analysis

    What is the difference between cash ...

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center