Overhead cost to perform the process "order materials and services" per $1,000 purchases
This measure calculates overhead cost per $1,000 purchases for planning, ordering, and executing the physical delivery of materials and services from suppliers to the points of need and use. Overhead costs refer to those that an organization cannot identify as direct costs of performing a process; these include occupancy, facilities, utilities, and maintenance, etc. This measure is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the process "order materials and services."
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Compute this Measure
Units for this measure are dollars.
Overhead cost to perform the process "order materials and services" / (Value of all materials and services purchased * .001)
Key Terms
Overhead Cost
For the purpose of this study, provide the total actual overhead costs for the year related to the specified process. These are costs that cannot be identified as a direct cost of providing a product or a service. Include the primary allocated costs such as occupancy, facilities, utilities, maintenance costs, and other major costs allocated to the consuming departments. Exclude systems costs that are allocated, since these will be captured separately as systems cost.
Cost Effectiveness
Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.