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This video presents Accounting treatment of overheads as overheads cannot be easily charge to cost object and cost centre. In this video we are going to learn the whole procedure of accouting of overhead
Content of the video is according to syllabus framed by Savitribai Phule Pune University for TYBCOM students for Cost and Works Accounting: II.
Hope this video will become a source of knowledge to you.
thanks for watching.
Syllabus of Cost and Works Accounting: II of Savitribai Phule Pune University
https://youtu.be/UsllAnT5OtY
2. ACCOUTING OF OVERHEADS
(PART-I)
Accounting of Overheads: I2
CHAPTER NO.:02
ACCOUNTING OF OVERHEADS (PART-I)
Collection and Allocation of overheads
Apportionment and Re-apportionment of
overheads
CHAPTER NO.:03
ACCOUNTING OF OVERHEADS (PART-II)
Absorption of overheads
3. PROCESS FOLLOWED TO LINK OVERHEADS
TO COST UNITS/ COST CENTRE
Accounting of Overheads: I3
1. Classification of overheads.
2. Codification of overheads.
3. Collection of overheads.
4. Allocation of overheads
5. Apportionment of overheads (Distribution of
overheads to production and service
departments: PRIMARY DISTRIBUTION OF
OVERHEADS)
6. Re-apportionment of overheads (Redistribution of
overheads of service departments to production
departments: SECONDARY DISTRIBUTION OF
OVERHEADS)
7. Absorption of overheads by production units.
4. CLASSIFICATION OF OVERHEADS
Accounting of Overheads: I4
Classification of overheads is a process of
grouping expenses according to their
common characteristics.
Function wise
Element wise
Behaviour wise
Control wise
Nature wise
5. CODIFICATION OF OVERHEADS
Accounting of Overheads: I5
Codification of overheads means assigning
code numbers so as to make it easier to
identify each group of overheads. .
The Numerical System
The Decimal System
The Alphabetical System
The Combined Code System
6. COLLECTION OF OVERHEADS
Accounting of Overheads: I6
Collection of overheads ensured that the expenses are
collected in correct account heading provided.
Stores Requisition
Invoices
Wages Analysis Book
Journal Entries
Cash Book
Other Registers and Report
7. ALLOCATION OF OVERHEADS
Accounting of Overheads: I7
Allocation of overheads is a process
of charging the full amount of
expenses which can be identified
wholly with a particular department
8. ALLOCATION OF OVERHEADS?
Accounting of Overheads: I8
When overheads can allocated
directly:
The cost centre must have caused the
overheads.
The exact amount incurred must be
known.
9. ALLOCATION OF OVERHEADS
Accounting of Overheads: I9
For Example:
There are five departments in ABC Ltd and
repairs of Computers Used by Human
Resource Department of ABC Ltd: Rs.
30,000
Can u Directly allocate this overheads
to Human Resource Department?
YES
Because
The cost centre and amount of
overhead is known.
10. APPORTIONMENT OF OVERHEADS
Accounting of Overheads: I10
Apportionment means charging of
overheads to production department
and service department on the most
equitable basis. The process of
apportionment of cost is also known
as PRIMARY DISTRIBUTION OF
OVERHEADS.
11. APPORTIONMENT OF OVERHEADS
Accounting of Overheads: I11
For Example:
There are five departments in ABC Ltd
and electricity charge of ABC ltd: Rs.
3,00,000
Can u Directly allocate this
overheads to Human Resource
Department?
NO
Because
The cost centre and amount of
12. APPORTIONMENT OF OVERHEADS
Accounting of Overheads: I12
For Example:
There are five departments in ABC Ltd
and electricity charge of ABC ltd: Rs.
3,00,000
We have to distribute/apportioned
this electricity charge among these
five departments on some
equitable basis.
What will be the equitable basis?
13. APPORTIONMENT OF OVERHEADS?
Accounting of Overheads: I13
OVERHEADS BASIS OF APPORTIONMENT
(EQUITABLE BASIS)
Rent Area Square Feet.
Depreciation of Machinery Value of Machinery
Power Horse power by machine hours
Repairs of Plant Value of Plant
Supervision Direct Wages
Canteen Expenses Number of Employees
14. RE-APPORTIONMENT OF OVERHEADS
Accounting of Overheads: I14
The costs of service department are
borne by the production departments.
This process of redistribution of the
cost of the service department to the
production department is known as
“SECONDARY DISTRIBUTION OF
OVERHEADS.”
15. ABSORPTION OF OVERHEADS
Accounting of Overheads: I15
Charging the overheads to individual
units or any particular product is
known as “OVERHEAD
ABSORPTION”
