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OVERHEAD

Prepared by:-

Ashish Goyal

www.find4education.com

www.amcap.in

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DEFINITION OF OVERHEADS

• Overheads are costs which do not relate solely to the cost units and must be shared equally between them.

• Sum of indirect materials, indirect wages and indirect expenses.

• Cost of Indirect materials, indirect labor and such other Expenses including services which cannot be conveniently charged to specific unit

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FEATURES OF OVERHEAD EXPENSES

• Indirect Costs• Common Costs• Comprise of cash expenses (rent) and book expenses (Depreciation)• Include Both Production & non- production expenses (AOH &SDOH)• Both fixed and variable

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OverheadClassification

Functional

Elements Controllability

Behaviour

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Functional

Factory

Administration Distribution

Selling

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Factory

Indirect Materials

LubricantsRepair MaterialsCotton WasteFactory SuppliesHardwares9Screws…Paints etc

Indirect Expenses

Rent, Rates, InsurancePower, lighting, heatingDepreciation, repairs &Maintenance of P&M,Furniture, buildingCanteen, welfare etc

Supervisors, foremanInspectorsStorekeepersMaintenance laborWork's ClericalWelfare StaffTool Room operatorWatch & Ward StaffWorks Manager

Indirect labor

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Indirect Materials

Office Stationery &Printing

Office Supplies

Indirect Expenses

Rent, RatesLighting, heating, cleaningPostage, telephone, courierDepreciation & MaintenanceLegal Charges, Audit Fee,Bank Charges

Indirect Labor

Office ClerksAccountant antsManagersSecretariesExecutivesDirectors

Administration

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Selling

Distribution

Indirect Materials

Stationery & PrintingCatalogues,Price Lists,Samples,PackingMaterials

Indirect Labor

Sales menRemuneration,Travelling Exp,Agents Comm.,Demonstrators,Sales Office Clerks

Indirect Expenses

Rent Rates and Insurance of Show rooms,Sales Office, Warehouse, Advertising,After Sales Services, Discounts, Bad debtsDelivery Expenses, Ware house Expenses,Reconditioning Of Returned Containers

&

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FixedRent Of Building, Property TaxesSalaries, Depreciation, InsuranceAudit fee, Certain office Expenses,Pension & PF etc

Semi Fixed/Variable

Normal MaintenanceWages Of SupervisorsTelephone Service DepartmentPower & lighting

Variable

Power & Lighting,indirect MaterialsIndirect LaborCost Of Lubricants,Internal TransportOvertime Premium,Tools & spare parts

On the basis of behavioral classification

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FuelLubricating oil,consumable storesSmall tools,Sundry storesCotton wasteSamples,stationeryPrice lists

ELEMENT WISE

INDIRECT MATERIALS

InspectorsSupervisorsClerksSalesmenExecutivesDirectorsManagersWarehouse staffStore keeperIdle timeOvertimeHoliday wages

Rent ,Rates, TaxesInsuranceCanteenDepreciationRepairsMaintenanceheatingPowerLightingHospital,dispensaryDistribution

INDIRECT WAGES INDIRECT EXPENSES

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Controllability

ControllableVariable

ControllableVariable

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THANK YOU