Archive about 'Overhead Costs'

What is Administrative Overhead and how is it treated in Cost Accounting?

Tweet Administrative overhead: Costs relating to formulating policy, directing and controlling operation of an undertaking Not related directly to production activity or function. On a norm, administration overhead are all expenses incurred on policy formulation, direction, control, office administration,etc What are the methods to treat Administrative overhead in Cost Accounting: (a)    Charge to Costing Profit […]

Cost Apportionment and How To Form A Basis To Do The Apportioning of Overheads Costs

Tweet Question:I was informed that when accountants performed cost apportionment to distribute the costs to a particular cost centre, they also encountered challenges or differ in opinion of using the basis to do so. (a)     Why is it so and (b)     Is there any standard basic guideline to do this cost apportionment? Suggested Answer: Earlier […]

List Of Topics Under The Heading Overheads Costing

Tweet Click to the respective topic on Overheads Costing Content Page On OVERHEADS COSTING 1.0 Overheads And Its Classification 2.0 Predetermined Overheads Absorption Rates 3.0 Reasons to classify overhead costs  

Why Do We Need To Classify Overhead Costs?

Tweet Earlier article dealt with definition and types of overhead.However, why the need to classify overhead costs?   Some justifications are appended below:     Classification enables an analysis to be made of overhead costs, under the nature of the item, the type of service provided and by department, cost centre, process and others   […]

Predetermined Overheads Absorption Rates & Illustration

Tweet What are predetermined overheads absorption rates? PREDETERMINED ABSORPTION RATES Rates that are already been ascertained to: Enable product costs to be calculated when production is completed; Facilitate planning and control since actual costs can only be known after the close of the costing period and Applies where there are seasonal activities and if actual […]

Overheads And Classification

Tweet This article defines what is overhead and the type/classification of overheads Definition Of Overheads: Overheads are costs which do not relate solely to the cost units and must be shared equitably between them. Examples of overheads are indirect material cost, indirect labour and indirect expenses. Types of Overheads Description Production overheads Relates to those […]