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Managing expenses is a key for business success, and overhead costs play a pivotal role in realizing favorable profit margins. Almost all companies have some form of overhead consisting of specific categories of indirect expenses. The better organizations are able to manage overhead costs, the more competitive they are in the marketplace. It is incumbent in the Controller’s role to effectively manage, monitor and perform ongoing assessment of overhead costs, allocations and rates.

Overhead refers to the ongoing business expenses not directly attributed to creating a product or service. A company must pay overhead on an ongoing basis, regardless of how much or how little the company sells. It is important for budgeting purposes but also for determining how much a company must charge for its products or services to make a profit.

Overhead can be fixed, variable, or a hybrid of both. There are different categories of overhead, such as administrative overhead, which includes costs related to managing a business. In short, overhead is any expense incurred to support the business while not being directly related to a specific product or service.

Learning Objectives

  • Explore and understand overhead costs.
  • Discover and examine types of fixed and variable overhead costs.
  • Identify and understand overhead rates and allocation methods.
  • Explore overhead allocation measures and overhead rate calculation.
  • Explore activity-based costing.
  • Recognize and review responsibilities of the controller for overhead costs.
Last updated/reviewed: May 16, 2022

Included In Certifications

This course is included in the following Certification Programs:

17 CoursesThe Controllership Series Certification

  1. The Controllership Series: The Controller Function - Elevating the Role
  2. The Controllership Series: The Controller Function - Strategic and Annual Planning
  3. GAAP Principles, Assumptions and Considerations
  4. The Treasury Function Part 1: Cash, Liquidity and Investments
  5. The Controllership Series: The Controller Function - Cash and Investments
  6. ASC 842 Accounting for Leases - Deep Dive
  7. Revenue Recognition (ASC Topic 606) Standard Overview
  8. The Controllership Series: The Controller Function - Inventory Part 1
  9. The Controllership Series: The Controller Function - Inventory Part 2 - Inventory Valuation, Physical Inventory Methods and Inventory fraud
  10. The Controllership Series: Overhead, Direct and Indirect Costs and Allocation Methods
  11. The Controllership Series: Financial Statement Preparation and Presentation
  12. Analyzing Financial Ratios - Leverage
  13. Analyzing Financial Ratios - Performance And Efficiency
  14. Analyzing Financial Ratios - Solvency, Liquidity and Debt
  15. The Controllership Series: The Financial Close Process
  16. The Controllership Series: Managerial Accounting Basics and Cost Principles
  17. Tools for The Controllership Series Certificate

11 Reviews (38 ratings)Reviews

5
Member's Profile
I love this Controllership series. Lynn you are a wonderful instructor with a knack for expressing content clearly and concisely. See you again soon in another course. Larry
4
Member's Profile
This one was ok even though it does not pertain to what I do. Still having to manually write in page numbers.
5
Anonymous Author
Good overview and refresher of overhead and direct and indirect cost. Good series to take as a refresher.
4
Anonymous Author
Good overview of overhead costs and allocation methods. PDF of slides is very useful as a reference.
5
Member's Profile
This was a good refresher for me. Not too basic, but hitting the underlying important concepts.
4
Anonymous Author
Good overview of overhead and allocation methods, broad high-level and helps refresh this area
5
Anonymous Author
Quick overview of overhead and allocation methods. Good to break this into it's own lesson.
4
Anonymous Author
This course was a little basic but still always learn something new with this instructor.
5
Anonymous Author
I enjoyed this course and the material provided, it was both engaging and informative.
5
Member's Profile
Good course on overhead costs and ways to make them more efficient.
5
Member's Profile
A very good course to refresh knowledge about costs allocations.

Prerequisites

Course Complexity: Foundational

No advanced preparation or prerequisites are required for this course.

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
  2:53Introduction to Overhead, Direct and Indirect Costs and Allocation Methods
  5:45Overhead Cost
  3:52Fixed and Variable Overhead Costs
  8:28Understanding Overhead Rates and Allocation Methods
  4:08Allocation Measures and Overhead Rate Calculation
  13:00Activity Based Costing
  13:01Responsibilities of The Controller
  1:00Summary
CONTINUOUS PLAY
  52:07Overhead, Direct and Indirect Costs and Allocation Methods
SUPPORTING MATERIAL
  PDFSlides: The Controllership Series: Overhead, Direct and Indirect Costs and Allocation Methods
  PDFThe Controllership Series: Overhead, Direct and Indirect Costs and Allocation Methods Glossary/ Index
REVIEW AND TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM