BBA II CMA

1. Overhead

2. Overhead :
 ‘Overhead is the aggregate of indirect
materials, indirect labour, and indirect
expenses’ -CIMA LONDON
 ‘Overhead costs are the operating costs of a
business enterprise which can not be traced
directly to a particular unit of output’-
Blocker and weltmer

3. Meaning :
 Expenditure on labour, materials or
services which cannot be economically
identified with a specific saleable cost
per unit.
 Overhead costs are also termed as
indirect costs.

4. Classification of overhead
 Overhead cost may be classified according to:
 1-Functions
 2-Elements
 3-Behaviour

5. Classification according to
functions
(a) Production overhead
(b) administrative overhead
(c) selling and distribution expenses

6. ELEMENT– WISE
CLASSIFICATION
(a)Indirect material
(b) Indirect wages
(c) Indirect expenses

7. Classification according to behaviour
or variability:
(a) Fixed overhead
(b) variable overhead
(c) semi-variable overhead

8. References/Sources
 Accounting for Managers by Dr. Sakshi Vasudeva Galgotia
Publishing Company Chapter 24 Overheads page no. 8237
 Cost Accounting by S.P jain K.L Naran Part 2 Chapter 8 Overhead
Accounting page no. 8.1

9. Thank U