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Overheads

Overheads

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Published by ankit_katarya

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Published by: ankit_katarya on Dec 19, 2008
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10/15/2014

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OVERHEAD COST
Overhead costs are the operating costs of a business enterprise which can notbe traced directly to a particular unit of output.ALLOCATION AND APPORTIONMENT OF OVERHEADSiv)Allocation and apportionment overheads among production & servicedepartments (primary distribution)v)Apportionment of service deptt among production deptt (secondarydistribution)
ALLOCATION
Allocation is the process of charging the full amount of overheads coststo a particular cost centre. This is possible when the nature of expensesis such that it can be easily identified with a particular cost centre.
APPORTIONMENT 
It is the process of splitting up an item of overhead cost and charging it tothe cost centers on an equitable basis.
 
 
BASES FOR APPORTIONMENT
Direct labour hours or directwages, or machine hours5. General overheadCapital values4. Depreciation, repairs, insuranceof machineryDirect wages3. ESI and PF contribution, FringebenefitsNumber of workers2. Fringe benefits, Labour welfareexp, Time keeping, SupervisionFloor area, or volume ofdepartment1. Rent & other building expenses,Fire precaution services, AirconditioningBASIS FOR APPORTIONMENTOVERHEAD COST
 
 
BASIS FOR APPORTIONMENT
No of light points or area7. Lighting expensesHorse power of machines ormachine hours or both6. Electric powerBASIS FOR APPORTIONMENTOVERHEAD COST

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