MOLDING OVERHEAD. There are two rates to be used for applying the molding overhead to an 
ndividual casting, and both are used when calculating the cost of a casting. One is a percentage of molding 
jirect labor, and the other is a fixed rate per net ton of good castings. All the molding indirect expense in 
‘he standard classification of accounts on page 8 with the exception of molding sand, material and supplies 
1sed in molding sand mixtures, sand mill labor, and pouring labor where hand shank ladles are used, are to be 
applied to a casting as a percentage of the molding direct labor. Therefore item 12 ($20.00) on the average 
cost summary on page 18, less the sum of items 8, 9, 10, and I1 ($3.40), divided by item 4 ($18.00), and the 
result multiplied by 100, gives one molding overhead rate of 92% of the molding direct labor in this example. 
The other molding overhead rate to be used along with the percentage rate, is the sum of items 8, 9, 10, and 
r1. which in this case is $3.40 per net ton of good castings. 
CORE OVERHEAD. The core overhead rate is established in a manner similar to the molding over- 
read rate, that is, the core department indirect expense is a percentage of the core direct labor. Item 13 
$6.65) divided by item 5 ($5.00) and the result multiplied by 100, gives a core overhead rate of 133% of the 
~ore direct labor. 
CLEANING OVERHEAD. The cleaning overhead rate is established in the same manner as the 
nolding and core overhead rates, that is, the cleaning department indirect expense is a percentage of the clean- 
ng direct labor. Item 14 ($12.65) divided by item 6 ($10.00) and the result multiplied by 100, gives a clean- 
ng overhead rate of 126.5% of the cleaning direct labor. 
ANNEALING COST. The annealing cost is a rate per net ton of good castings to be applied to all 
-astings annealed. It is item 15 on the average cost summary, which in this instance is $3.25 per ton of good 
~astings. 
GENERAL OVERHEAD. Two rates are used for the general overhead expense defined in the 
standard classification of accounts on page 11; that is, the general overhead expense is divided into two rates 
1nd both of them are used when calculating the cost of a specific casting. One is a percentage of the com- 
sined molding, core, and cleaning direct labor, and the other is a fixed rate per net ton of good castings. The 
following items of the general overhead expense are to be applied to a casting as a percentage of the com- 
bined molding, core, and cleaning direct labor: insurance, taxes, depreciation, salaries, administrative ex- 
sense, and selling expense. All the other items comprising the general overhead expense are to be applied to 
1 casting as a fixed rate per net ton of good castings. Refer to the average cost summary on page 19 for the 
division of general overhead expense into tonnage charge and direct labor charge. 
The rates for the general overhead expense like the overhead rates mentioned in the foregoing para- 
sraphs for the productive departments, must be established from average costs representing average operat- 
ng conditions in each foundry. If it is assumed that the cost summary on page 18 which contains assumed 
jgures, represents average costs, the determination of the two general overhead rates is illustrated in the 
‘ollowing: The sum of items 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 and 36, is $36.50, and this divided by item 7 
'$33.00) and the result multiplied by 100, gives one rate for the general overhead as 110.6% of the combined 
molding, core, and cleaning direct labor. Item 37 ($68.70) less $36.50 gives $32.20 per net ton as the other rate 
{or the general overhead. 
There is a certain minimum general overhead cost per ton for each foundry that should be taken into 
.onsideration when calculating the cost of a casting. It is to be used when the general overhead cost obtained 
yy computing it with the use of the two general overhead rates mentioned above, is less than the established 
ninimum general overhead cost per ton. Fach foundry should establish its minimum general overhead ex- 
sense per ton by taking its average general overhead expense in total amount and dividing this by the maxi- 
mum number of tons of good castings that could be produced, taking into consideration the factors that limit 
the output of the foundry. If the average general overhead expense (item 37 on page 19) during average 
sonditions of operation is $45,342.00 as shown on the average cost summary on page 19, and the average num- 
her of tons of good castings produced during normal conditions in the foundry industry is 660, it may be possi-