Classification of overheads on different bases in the study of Cost Accounting

1. II B.com-IV Semester Chapter I: OverheadsChapter II: Secondary Distribution of Overheads

2. OH is, “expenditure on labour, material or services which cannot be economically identified with a specific saleable cost per unit”-CIMA, London “ Overheads comprise of indirect material, indirect employee costs and indirect expenses which are not directly identifiable or allocable to a cost object in an economically feasible way”-CAS 3 of ICWAI Definition of Overheads

3. Manufacturing Overhead Administration Overhead Selling & Distribution Overhead Functional Classification of Cost

4. Fixed Overheads Semi-Variable Overhead Variable Overhead Classification on the Basis of Behaviour

5. Allocation is,” assigning a whole item of cost directly to a cost centre” – CAS 3 of ICWAI Apportionment is ,” the allotment of two or more cost centers' of proportions of the common items of cost and the estimated basis of benefits received” Allocation & Apportionment

6. Primary Distribution of Overheads Secondary Distribution of Overheads Types of Distribution of Overheads

7. Serving only Production Departments: Direct Distribution Method Serving both Production and Service Departments: - No Mutual Service: Step-Ladder Method - Mutual Service: Repeated Distribution Method and Simultaneous Equation Method Types of Service Departments & Methods of Distribution