fabricageoverhead
Fabricageoverhead, also referred to as fabrication overhead, is the portion of manufacturing overhead that is tied to the fabrication stage of production. It encompasses indirect costs incurred in converting raw materials into fabricated components, and is distinguished from overhead related to other stages such as assembly, finishing, or packaging. In cost accounting, fabricageoverhead is allocated to produced units based on a chosen activity base, rather than being traced directly to individual units.
Typical components include indirect materials used in fabrication (lubricants, coolants, cleaning supplies), indirect labor in the
Allocation methods: A fabrication overhead rate is often determined before the period, using estimated fabrication overhead
Impact: Understanding fabricageoverhead helps managers price products, evaluate profitability, and identify inefficiencies in the fabrication process.