In this article we will discuss about the procedure for linking manufacturing overhead to cost units. How to Link Manufacturing Overhead to Cost Units: Rate Formula, Examples and Procedure. In order to arrive at the total cost of production, overhead is added to the prime cost. The overhead, being common/general cost incurred for number of units/cost centres, is to be [...]
In this article we will discuss about the treatment of overheads: 1. Administration Overhead 2. Selling and Distribution Overhead 3. Research and Development Expenses. Administration Overhead: The administration division of an organisation lays down policies and oversees the implementation of the policies. The main function of this division is planning and organising and control of various activities. This differentiates the [...]
Overheads are costs, which are not traced directly to cost units. In other words, overhead is the total of indirect material costs, indirect labour costs, and indirect expenses. The terms 'burden', 'supplementary costs', 'on costs', and 'indirect expenses' are used interchangeably for overhead. Overheads are aggregated under some account head (e.g. supervisors' salary, office lighting, depreciation, and building up-keep) and [...]