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Overhead are costs that are indirectly related to the sales process. For example, the cost of electricity in a factory is an overhead cost in the production of toys. To clarify - overhead costs are expenses not directly related to the production of goods for sale. While electricity would be an example of an overhead expense in a office, etc... in a manufacturing environment where electricity is directly tied to the usage of machines used to produce items (in this example toys) it would be better classified as a cost of goods sold. In almost all cases an expense such as real estate taxes or routine building maintenance would be consdiered overhead.
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What is included in direct overheads and what is included in indirect overheads?
The items which are included in direct overheads are the ones which are directly related to production process like salaries of machine operators and buying raw materials. The ones that are included in indirect overheads do not relate to production like giving to charity among others.
What is the difference between variable overheads cost variance andfixed overheads cost variance?
Variable overhead cost variance is that variance which is in variable overheads costs between the standard cost and the actual variable cost WHILE fixed overheads cost variance is variance between standard fixed overhead cost and actual fixed overhead cost.
Difference between marginal cost accounting statements and absorption cost accounting statement?
marginal costing considers only direct) materials,labour,expenses and variable factory overheads excluding fixed factory overheads but absorption considers (direct) materials ,labour,expenses,variable and fixed factory overheads.
What is the differences between activity-based costing and traditional product costs?
In traditional costing, overheads are allocated using blanket rate while in activity based costing overheads are allocated by the activities performed.
What is general fixed overheads?
General fixed overheads refer to the ongoing business expenses that do not fluctuate with production levels. These costs typically include rent, salaries, utilities, and insurance, which remain constant regardless of the volume of goods or services produced. Understanding these overheads is crucial for budgeting and financial analysis, as they impact overall profitability and pricing strategies.
What are non production overheads?
Non production overheads are costs associated with the workings of a company. These costs do not go directly into making the item. For example, electricity or office space are non production overheads.
What is included in direct overheads and what is included in indirect overheads?
The items which are included in direct overheads are the ones which are directly related to production process like salaries of machine operators and buying raw materials. The ones that are included in indirect overheads do not relate to production like giving to charity among others.
What is the difference between variable overheads cost variance andfixed overheads cost variance?
Variable overhead cost variance is that variance which is in variable overheads costs between the standard cost and the actual variable cost WHILE fixed overheads cost variance is variance between standard fixed overhead cost and actual fixed overhead cost.
What ara overheads cost?
Overheads are the ongoing expenses of operating a business that are not directly tied to producing a product or service. They include costs such as rent, utilities, salaries of non-production staff, and office supplies. Overheads are essential for maintaining daily operations but do not contribute directly to revenue generation. Properly managing overheads is crucial for maintaining profitability and efficiency.
Are postage and stationery business overheads?
yes.
What is meant by the terms under-absorption and over-absorption of fixed overheads how they arise and how they are calculated?
Over or Under AbsorptionNote that as long as planned level of activity and the actual level of activity is not the same there is always an Over or Under Absorption situationThis is because overhead absorption rate is set at the start of the period based upon an expected level of production and that during the period, the level of output and or overheads will be different from the planned overheads and or output.OVER-absorption occurs when the total overhead recovered or absorbed is GREATER than the actual level of overheads for the period.UNDER-absorption occurs when the total overheads recovered or absorbed is LESS than the actual overheads incurred in the period.
What are the advantage of cottage indutries?
Low overheads and diversity of products
Difference between marginal cost accounting statements and absorption cost accounting statement?
marginal costing considers only direct) materials,labour,expenses and variable factory overheads excluding fixed factory overheads but absorption considers (direct) materials ,labour,expenses,variable and fixed factory overheads.
How do you identify under and over absorption?
Over or Under AbsorptionNote that as long as planned level of activity and the actual level of activity is not the same there is always an Over or Under Absorption situationThis is because overhead absorption rate is set at the start of the period based upon an expected level of production and that during the period, the level of output and or overheads will be different from the planned overheads and or output.OVER-absorption occurs when the total overhead recovered or absorbed is GREATER than the actual level of overheads for the period.UNDER-absorption occurs when the total overheads recovered or absorbed is LESS than the actual overheads incurred in the period.
What are overheads in construction law?
In construction law, overheads refer to the indirect costs associated with a construction project that are not directly attributable to specific tasks or materials. These can include expenses such as administrative costs, utilities, office supplies, and salaries of supervisory staff. Overheads are typically calculated as a percentage of direct costs and are crucial for determining the total project budget and ensuring that contractors are adequately compensated for their expenses. Properly accounting for overheads is essential to avoid disputes and ensure financial viability.
What are the three elements in a cost contlol system?
materials, labour and overheads
How do you find the cost to the store?
It is the wholesale price plus a share of the overheads.
