Overhead costs as a percentage of cost of goods sold
This measure calculates the percentage of cost of goods sold (COGS) that comes from overhead costs. 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. COGS represents the cost of purchasing raw materials and manufacturing finished products. This measure is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the process "produce/manufacture/deliver product."
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Units for this measure are percent.
Overhead cost as a percentage of cost of goods sold
Key Terms
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 of goods sold (COGS) is the amount on an income statement that represents the cost of purchasing raw materials and manufacturing finished products. This represents specific or direct manufacturing cost of material and labor entering in the production of finished goods. For merchandise companies, cost of goods sold represents the purchase price of items sold, as well as indirect overhead such as freight, inspecting, and warehouse costs. For service organizations, cost of goods sold may be referred to as Cost of Services.
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.