By: - Onkar Sule Roll No : - 54

 Indirect costs which cannot be easily allocated to any specific Job or Process because they are not capable of being identified with any specific Job or Process.  Also called as Operating cost.  Operating Cost = Cost of goods sold + Operating Expenses

OVERHEAD Few more names Overhead expenses Overhead Cost Overhead Charges Overhead expenditure On cost Supplementary costs Non-productive costs Burden Costs Loading Costs Indirect Cost

 Process by which cost items are charged direct to a cost unit or cost centre. It is the process of charging the traceable amount of overhead to cost centre or cost unit. Overhead costs by their nature cannot often be related to one particular cost centre.  Apportionment is the division of costs among two or more cost centers in proportion to the estimated benefits received, using some logical basis.

Overhead FabricationAssemblingMachining Plant-! Plant-2 MaintenancePowerStoresCanteen

Distribution of Overhead APPORTIONMENT Common Costs Common costs are apportioned Amongst different departments or cost centers on some basis

Type of overheadBasis of apportionment 1.Rent and rates, heating, repairs, depreciation of buildings 2.Lighting 3.Power 4.Depreciation, insurance, repairs and maintenance of a plant and vehicle 5.Personnel, Staff Welfare Canteen, wages, Cost office 6.Stores 7.Selling and Distribution 8.Advertisement Area occupied(Floor space) Number of light points, area occupied Horsepower of machines or machine hours Book value of asset or original cost Number of employees or wages paid No. of stores requisitions or value of material issued or value of material stored Sales value