Without overheads, we can not operate our business. Still it is not main part of production cost but we can not make the product without overheads. So, it is necessary to add it and to go to its classification.
On the Basis of Function of Departments
1. Production Department Overheads
All the production department's overheads will include in this. Its other name is factory overheads or manufacturing overheads. It includes all indirect expenses like factory building rent, factory electricity and factory indirect material like grease, oil and spare clothes and cotton and indirect labor includes factory store keeper salary, factory supervisor and peon and watchmen's salary.
2. Sales and Distribution Department Overheads
For promotion of sales, there is need of paying sales department overheads. It includes the indirect expenses of salaries and commission of salesmen, showroom rent, salesmen's travelling expenses, advertising and bed debts.
3. Other Department Overheads
Except production centers and sales departments, there are lots of other department which include in administration and office. So, it includes salaries of office employees, office lighting and electricity, repair and depreciation of office assets and vehicles, carriage outward, and warehouse expenses.
1. Fixed Overheads
All overheads which do not change if there is change in the production, all such overheads will be fixed overheads.
2. Variable Overheads
All the overheads which change due to change in the production, will be the variable overheads.
3. Semi-Variable Overheads are those which have both fixed and variable overheads qualities. Such expenses will be fixed at certain level of production after this, these expenses will change according to change in the production.
Related : Methods of Segregation Semi Variable Cost into Fixed Cost and Variable Cost
On the Basis of Function of Departments
1. Production Department Overheads
All the production department's overheads will include in this. Its other name is factory overheads or manufacturing overheads. It includes all indirect expenses like factory building rent, factory electricity and factory indirect material like grease, oil and spare clothes and cotton and indirect labor includes factory store keeper salary, factory supervisor and peon and watchmen's salary.
2. Sales and Distribution Department Overheads
For promotion of sales, there is need of paying sales department overheads. It includes the indirect expenses of salaries and commission of salesmen, showroom rent, salesmen's travelling expenses, advertising and bed debts.
3. Other Department Overheads
Except production centers and sales departments, there are lots of other department which include in administration and office. So, it includes salaries of office employees, office lighting and electricity, repair and depreciation of office assets and vehicles, carriage outward, and warehouse expenses.
On the Basis of Production Activities
1. Fixed Overheads
All overheads which do not change if there is change in the production, all such overheads will be fixed overheads.
2. Variable Overheads
All the overheads which change due to change in the production, will be the variable overheads.
3. Semi-Variable Overheads are those which have both fixed and variable overheads qualities. Such expenses will be fixed at certain level of production after this, these expenses will change according to change in the production.
Related : Methods of Segregation Semi Variable Cost into Fixed Cost and Variable Cost
tq
ReplyDeleteThanks man
ReplyDelete