This method of assigning overhead costs to a product using a single overhead rate is an interesting one. It goes against what I have been taught and the way of thinking about economics. I’ll share my thoughts on this one in the future.
My own method for the assignment of overhead costs to a product is quite different, but it’s based on the same thinking. It’s based on the idea that overhead costs are, as stated above, a measurement of how much money is spent on something in a given period of time, and the overhead rate is the amount of money that is spent on overhead, divided by the number of units of that product that are consumed. These two terms are then compared against each other.
I’m not saying we should just use overhead costs, but I’m suggesting that you should use them to create your own, and that’s why this trailer is so powerful.
That’s right. Because I’m not sure that that method of overhead cost calculation is very popular these days. And maybe that’s because it’s really hard to compare overhead costs, as they differ so much between different products. But its very easy to come up with the idea of calculating your overhead cost by dividing the cost of an item by the time it takes to consume it. I thought about that for a long time.
In the game, the Overhead rates are really important as they are the ones that determine the overall price of the product. The overhead rates are the rates that you pay for the product so that you don’t lose money on it. In the game, you can use the overhead rates to create the items that you want to make your own, and so that you can make it cheaper for other players by doing so.
So I can imagine that there are a ton of items in the game that cost by dividing the overhead rate of the item by the time it takes to consume it. The overhead rate is the rate that you pay for the product so that you dont lose money on it.
I think that was a rather obvious point. And I am not even going to get into the game yet.
But let’s say you have a product that costs $10 per hour to produce. You can set the rate to $10 per hour for your overhead cost. What happens when you make this product and your overhead rate is $1 per hour? You must pay an extra $1 for every hour your overhead cost increases. That $1 can be passed on to your customers. So it’s basically a way of being a more aggressive seller.
The one thing that I dont think anyone is clear on is how to deal with that additional 1. One option is to increase the overhead cost of your product to reflect the extra 1 you are making it take. Another option is to increase your overhead cost per hour by the same amount as the change in overhead cost. So you increase your overhead cost to 4 per hour and the change in overhead cost to 1 per hour.
The problem with this is that it basically means your customer, the vendor, is paying the same amount for your overhead cost that the vendor is paying for your overhead cost. That means that if your vendor is paying 3 times the overhead rate of a company that is paying 1.2 times the overhead rate, your vendors overhead costs are in effect decreasing by 1.2 times.