What is overhead costs in SAP CO - Controlling?

SAP Term: overhead costs

• Component: CO

• Component Name: Controlling

• Description: The costs that cannot be traced directly to a particular allocation base such as a product. These include costs that could conceivably be traced directly to cost objects or cost centers, but are allocated by means of overhead keys instead because it is not economically feasible to trace such costs for example, the costs for screws and other small parts.

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• Key Concepts: 
  Overhead costs are expenses that are not directly related to the production of goods or services. They are typically fixed costs that are incurred regardless of the level of production or sales. In SAP Controlling (CO), overhead costs are classified as either indirect or direct costs. Indirect costs are those that cannot be directly attributed to a specific cost object, such as administrative expenses, while direct costs can be attributed to a specific cost object, such as materials and labor. 
  
  How to use it: 
  In SAP Controlling (CO), overhead costs can be managed by assigning them to cost centers or cost objects. Cost centers are organizational units that incur costs, while cost objects are the products, services, or activities for which the costs are incurred. Overhead costs can also be allocated to cost objects using various methods, such as direct allocation, step-down allocation, and activity-based costing. 
  
  Tips & Tricks: 
  It is important to accurately track and allocate overhead costs in order to get an accurate picture of the total cost of production or services. This will help you make informed decisions about pricing and other aspects of your business. 
  
  Related Information: 
  For more information on managing overhead costs in SAP Controlling (CO), please refer to the official SAP documentation here: https://help.sap.com/viewer/product/SAP_CONTROLLING/80000001/en-US