What are the methods used for calculating nonmanufacturing overhead costs? And what are the rates?

Question

Thank you in advance

Answer 1

We use the term "nonmanufacturing overhead costs" or "nonmanufacturing costs" to mean the Selling, Administrative & General (SG&A) expenses and Interest Expense. Under generally accepted accounting principles (GAAP), these expenses are not product costs. (Product costs only include direct material, direct labor, and manufacturing overhead.) Nonmanufacturing costs are reported on a company’s income statement as expenses in the accounting period in which they are incurred. Expressed another way, nonmanufacturing costs are not allocated to products via overhead rates since they are not included in the amounts reported as inventory on the balance sheet or in the cost of goods sold that is reported on the income statement.

Even though nonmanufacturing overhead costs are not product costs according to GAAP, these expenses (along with product costs and profit) must be covered by the selling prices of a company’s products. In other words, selling prices must be large enough to cover SG&A expenses, interest expense, manufacturing overhead, direct labor, direct materials, and profit.

Some of the costs that would typically be included in nonmanufacturing costs include:
Salaries and fringe benefits of selling, general and administrative personnel. This would include the company president, vice presidents, managers, and other employees in the nonmanufacturing functions of the company.
Rent, property taxes, utilities for the space used by the nonmanufacturing functions of the company.
Insurance for areas outside of the factory.
Interest on business loans.
Marketing and advertising.
Depreciation and maintenance of equipment and buildings outside of manufacturing.
Supplies for the offices.

Click on the link and scroll down to Methods of Allocating Nonmanufacturing Overhead

Answer 2

Non Manufacturing Cost

Answer 3

There's no real science to this, just adding up the numbers.

Work out what your costs are other than cost of sales (manufacturing costs). These are things like telephone, postage, stationery, insurance, salaries for non-manufacturing personnel, rent, rates, heat, light and so on.