Overhead Cost

Overhead cost management is an increasingly important issue. As production processes become more automated, labour inputs are reduced yet capital and other overhead costs are increased. Traditional methods of overhead apportionment allocate increasingly large sums of money on the basis of a rapidly decreasing direct cost base. The usefulness of product costs calculated in this way is marginal, and methods to manage and control the total overhead cost burden are imperative. In this text, John Innes and Falconer Mitchell guide the reader through the strengths and limitations of traditional cost management approaches in the current environment. New approaches, such as Activity-Based Costing (ABC), are described and their merits assessed, together with more well known techniques such as Zero-Based Budgeting (ZBB) Priority-Based Budgeting and Target Costing. Whereas in the past control could take place on a day-to-day basis because many costs were incurred from day to day, in the modern world much greater reliance has to be placed on product design and production planning. Once a product has been designed and a production process set into operation, the options available for controlling costs become much more limited. Successful cost control now demands a more proactive stance on the part of the manager. This book sets out some of the techniques that are available to help in that task.Innes, John is the author of 'Overhead Cost', published 1993 under ISBN 9780123721402 and ISBN 0123721407.