Applied Overhead

Costs accrued during the production process of whatevers that are not tied to a product or service...need to be included in cost of goods sold for accounting purposes. In this sense, accountants are applying the overhead "ratably" on a unit-by-unit basis.

So, for example, the annual charge of $10M to rent the rubber extruding whoopee cushion blower has to be ratably expensed against the 5M whoopee cushions being produced that year. In this sense, the applied overhead then adds $2 per cushion. Which is, uh...more for the pushin'.