PPT - Overheads B Com Notes | EduRev

Cost Accounting

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B Com : PPT - Overheads B Com Notes | EduRev

 Page 1


 
OVERHEAD
                   
Page 2


 
OVERHEAD
                   
Definition
?
Overhead is those costs required to run a business, but which 
cannot be directly attributed to any specific business activity, 
product, or service.
?
In business, overhead or overhead expense refers to an ongoing 
expense of operating a business; it is also known as an "operating 
expense".  Overheads  are  the expenditure which  cannot  be 
conveniently traced to or identified with any particular cost unit.
?
However, overheads are still vital to business operations as they 
provide critical support for the business to carry out profit 
making activities.
Page 3


 
OVERHEAD
                   
Definition
?
Overhead is those costs required to run a business, but which 
cannot be directly attributed to any specific business activity, 
product, or service.
?
In business, overhead or overhead expense refers to an ongoing 
expense of operating a business; it is also known as an "operating 
expense".  Overheads  are  the expenditure which  cannot  be 
conveniently traced to or identified with any particular cost unit.
?
However, overheads are still vital to business operations as they 
provide critical support for the business to carry out profit 
making activities.
 
Page 4


 
OVERHEAD
                   
Definition
?
Overhead is those costs required to run a business, but which 
cannot be directly attributed to any specific business activity, 
product, or service.
?
In business, overhead or overhead expense refers to an ongoing 
expense of operating a business; it is also known as an "operating 
expense".  Overheads  are  the expenditure which  cannot  be 
conveniently traced to or identified with any particular cost unit.
?
However, overheads are still vital to business operations as they 
provide critical support for the business to carry out profit 
making activities.
 
   Administrative overheads
Page 5


 
OVERHEAD
                   
Definition
?
Overhead is those costs required to run a business, but which 
cannot be directly attributed to any specific business activity, 
product, or service.
?
In business, overhead or overhead expense refers to an ongoing 
expense of operating a business; it is also known as an "operating 
expense".  Overheads  are  the expenditure which  cannot  be 
conveniently traced to or identified with any particular cost unit.
?
However, overheads are still vital to business operations as they 
provide critical support for the business to carry out profit 
making activities.
 
   Administrative overheads
? Administrative overheads such as utilities, strategic planning, and various 
supporting functions. These costs are treated as overheads due to the fact 
that they aren't directly related to any particular function of the 
organization nor does it directly result in generating any profits. Instead, 
these costs simply take on the role of supporting all of the business' other 
functions.
? Employee salaries
? This includes mainly monthly and annual salaries that are agreed upon. 
They are considered overheads as these costs must be paid regardless of 
sales and profits of the company. In addition, salary defers from wage as 
salary is not affected by working hours and time, therefore will remain 
constant. 
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