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Overview of Overheads and Methods of Overheads:

The term Overhead is generally the cost relevant towards the specific cost unit. It is of two types, namely direct and indirect. It is mainly employed for the aim of maintaining the main capital assets. The term itself is of great significance and is as well termed as the supplementary costs, indirect expenses, on costs and point costs.

It generally exhibits the techniques for collecting and assigning the factory overhead costs. These techniques are based on the kind of cost drivers, that an organization employs to assign the factory overhead costs to products and batches of products. The techniques are, respectively, volume-based costing and activity-based costing.

Types of Overheads:

1) Functional Classification: It is of two types:

  • Manufacturing Overheads
  • Non- Manufacturing Overheads

2) Classification on the basis of the behavior of the expenses: This is quite significant as it assists in controlling the cost and help in decision making. It is of three types:

  • Fixed
  • Variable
  • Semi-variable

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Overheads and Methods of Overheads related topics, in which we provide online assistance:

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