What is Actual Overhead?

Actual overhead is indirect factory costs that have been incurred. This is essentially all factory costs, except for direct material and direct labor costs. Actual overhead costs cannot be directly traced to specific products or services, but are still required to ensure that the supporting operations are conducted in an efficient manner.

Actual overhead may differ from applied overhead, which can be based on a standard overhead rate that differs somewhat from the actual amount of overhead incurred.

Examples of Actual Overhead

Examples of actual overhead costs are equipment maintenance, factory depreciation, factory insurance, factory rent, factory property taxes, factory utilities, production supervisor salaries, and production supplies.