The pool and the base
What goes in the overhead pool, how it is spread, and why the allocation base is a decision rather than a fact.
What Is in the Pool
The overhead pool is a list of costs nobody can attribute directly. What should be in it, what should not, and why the contents decide the argument.
The Allocation Base Is a Decision
Whatever spreads the overhead pool decides which work looks profitable. The four common bases, what each penalises, and how to choose deliberately.
Labour Hours as a Base, and Where It Fails
The most common allocation base and its three failure modes. When it is right, when it quietly distorts, and what the alternative costs.
Departmental Rates Versus One Rate
A single plant-wide rate is simple and blurs everything. When to split into departmental rates, how many, and what the split reveals.
Under- and Over-Recovery
The pool is recovered through a rate set in advance, so the two never match. What the difference means, how to split it, and where it must not go.
The Overhead That Is Really Direct
Costs sit in the pool because tracing them was never attempted. The four that usually come out, and what tracing them is worth.
Explaining the Pool to the People In It
Overhead recovery is resented because it is invisible. What to show, to whom, and what changes when the list is published.