Factory Overhead

Insurance, electricity, janitorial services, and other expenses of a factory that are allocated to goods manufactured when using an Absorption Costing system; all manufacturing expenses except Direct Materials and Direct Labor.

Total of all costs of manufacturing except direct materials and direct labor, also called manufacturing overhead, indirect manufacturing expenses, factory expenses, and factory burden. In addition to Indirect Materials and Indirect Labor, it includes such items as depreciation, setup costs, quality costs, cleanup costs, fringe benefits, payroll taxes, and insurance. It is an inventoriable cost charged by allocation to Work-In-Process.