Overhead Costing

Selling and Distribution Overheads

Definition of Selling and Distribution Overheads According to the terminology adopted by the Institute of Cost and Management Accountants, England, the selling overheads constitute “the cost incurred in promoting sales and retaining customers“ and the distribution overheads constitute “the cost of the process which begins with making the packed product available for despatch and ends …

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Administrative Overheads

Introduction It is common practice to classify and separately collect the production, administrative, selling and distribution costs. The administrative overheads are related to office expenses. The selling and distribution expenses are related to marketing. All these expenses combined together give us the total selling cost. While accounting the production overheads and valuing the closing stock, …

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Overhead absorption

What is Overhead Absorption? Overhead absorption is defined as the allotment of overhead to cost units. When the amount of overheads has been determined on the pre-determined basis for each cost center, the next step is to charge it to production. This involves taking each cost center and to apply its overheads to all the …

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Departmentalization of Overheads

Definition Departmentalization of overheads refers to the process of determining overhead costs of each department involved in the production. Explanation For the purpose of departmentalization, departments of a factory are divided into two categories i.e., production departments and service departments. Departmentalization of overheads is done in two stages. (a) Allocation of Overheads (b) Apportionment of Overhead …

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