Q.Correct the underlined portion of the following sentence: Rent of office building is a variable cost.
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🔒 Start your 14-day free trial to unlock the full solution →Concept understanding — Meaning and Classification of Overheads
Overhead is the aggregate of indirect material, indirect labour and indirect expenses — costs incurred for production as a whole that cannot be conveniently and wholly traced to a single cost unit, and so must be shared over output. It is also called on-cost, burden, supplementary cost or indirect cost. Overhead is classified in four main ways: by function (factory, office & administration, and selling & distribution overhead), by behaviour or variability (fixed, variable and semi-variable), by eleme …
Office rent does not change with the level of output; it stays the same whether production is high or low, so it is a fixed cost, not a variable cost. The underlined word 'variable' should be …
'Variable' is wrong — rent of an office building is a fixed cost.
A variable cost changes in total with output; a fixed cost stays constant over a range of activity. Office building rent is payable at a fixed amount per period regardless of how many u …
Showing the 12 most recent of 13 on this concept.
- CBSE 2024Set ANNUAL1 markQ.Fill up the blanks :(xii) Salary paid to General Manager is an item of ________ expenses.
›Reveal solutionSolution
The blank is administrative (office) overhead.
Overheads are classified by function into factory, office/administration and selling & distribution overhead. The General Manager oversees the general administration of the whole enterprise rather than a specific factory or sales activity, so his salary is charged to OFFICE & ADMINISTRATION …
- CBSE 2023Set ANNUAL1 markMCQQ.Repairs to plant is a / an :(a) Office overhead(b) Factory overhead(c) Selling overhead(d) Distribution overhead
›Reveal solutionSolution
Repairs to plant is a Factory (works) overhead.
Overheads are classified by function. Plant and machinery is used in the factory to carry on production, so any cost of maintaining it is an indirect manufacturing cost.
- Factory/works overhead — indirect costs of the factory: repairs to plant, factory rent, power, works manager's salary. ✓ …
- CBSE 2023Set ANNUAL1 markQ.Answer the following questions in one sentence each :(iv) What is overhead?
›Reveal solutionSolution
Overhead = indirect material + indirect labour + indirect expenses.
Overhead (also called “on-cost” or indirect cost) is the aggregate of all indirect costs — indirect materials, indirect wages and indirect expenses — which cannot be conveniently identified with and charged directly to a specific job, product or cost unit, and so must be apportioned and absorbed.
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- CBSE 2023Set ANNUAL1 markQ.Fill in the blanks :(xii) ______ expenses are used interchangeably for overhead.
›Reveal solutionSolution
Fill in: Indirect (expenses).
Overhead is, by definition, the aggregate of indirect costs that cannot be charged directly to a cost unit. Hence the terms "overhead" and "indirect expenses" (also "on-cost" or "burden") are used i …
- CBSE 2022Set ANNUAL1 markMCQQ.Office rent is a / an :(a) Works overhead(b) Office overhead(c) Selling overhead(d) Distribution overhead
›Reveal solutionSolution
Functionally, office rent is the cost of housing the administrative office, so it is an office/administration overhead — option (b).
In this +2 Class-12 Cost Accounting (CHSE Odisha, aligned with the NCERT/CBSE commerce curriculum) item, overheads are grouped by function:
- Factory / works overhead — indirect costs of the factory (factory rent, power, works manager salary).
- Office / administration overhead — indirect costs of general management and the office (office rent, office salaries, printing, stationery). …
- CBSE 2022Set ANNUAL1 markMCQQ.Carriage outward is, a / an :(a) Factory oncost(b) Office oncost(c) Administrative oncost(d) Distribution oncost
›Reveal solutionSolution
Carriage outward = freight on sending finished goods out to customers = a distribution overhead (oncost) — option (d).
In +2 Class-12 Cost Accounting (CHSE Odisha), 'oncost' simply means overhead. Note the direction of carriage:
- Carriage inward — freight on bringing in raw materials; a part of material cost / factory oncost. …
- CBSE 2022Set ANNUAL1 markMCQQ.Factory rent is :(a) Office overhead(b) Selling overhead(c) Works overhead(d) Distribution overhead
›Reveal solutionSolution
Rent of the factory building is an indirect cost of manufacturing, so it is a works (factory) overhead — option (c).
In +2 Class-12 Cost Accounting (CHSE Odisha, NCERT/CBSE-aligned), overheads are grouped by function. Rent connected with the factory premises is incurred to carry on production, so it is a **work …
- CBSE 2022Set ANNUAL1 markMCQQ.Salaries to the driver of delivery van, is :(a) Selling overhead(b) Distribution overhead(c) Works overhead(d) Office overhead
›Reveal solutionSolution
A delivery van delivers finished goods to customers, so the driver's salary is a distribution overhead — option (b).
In +2 Class-12 Cost Accounting (CHSE Odisha), distribution overheads are the costs of making the finished product reach the customer — carriage outward, warehousing, and the running of delivery vehicles (includi …
- CBSE 2022Set ANNUAL1 markMCQQ.Cost of warehousing is a :(a) Distribution cost(b) Selling cost(c) Administrative cost(d) Manufacturing cost
›Reveal solutionSolution
Storing finished goods in a warehouse before delivery is a distribution cost — option (a).
In +2 Class-12 Cost Accounting (CHSE Odisha), distribution overheads cover getting finished goods to customers — which includes warehousing of finished stock, carriage outward and delivery. I …
- CBSE 2020Set ANNUAL1 markMCQQ.Classification of overheads into fixed and variable comes under(a) function-wise(b) behaviour-wise(c) element-wise(d) both(i) and (ii)
›Reveal solutionSolution
Fixed/variable is a behaviour-wise classification of overheads — option (b).
Overheads can be classified several ways in the CHSE Odisha +2 Cost Accounting course:
Basis Classes Function-wise Factory, office, selling & distribution Element-wise Indirect material, indirect labour, indirect expenses Behaviour-wise Fixed, variable, semi-variable … - CBSE 2020Set ANNUAL1 markQ.Correct the underlined portion of the following sentence: Rent of office building is a variable cost.
›Reveal solutionSolution
'Variable' is wrong — rent of an office building is a fixed cost.
A variable cost changes in total with output; a fixed cost stays constant over a range of activity. Office building rent is payable at a fixed amount per period regardless of how many u …
- CBSE 2020Set ANNUAL1 markQ.Answer in one sentence: Define overheads.
›Reveal solutionSolution
Overheads are the total of all indirect costs (indirect material + indirect labour + indirect expenses).
Overhead is the sum of indirect material cost, indirect labour cost and indirect expenses. These are costs that are incurred for the business as a whole and cannot be traced wholly to a single unit of output, so they must be apportioned and absorbed. Examples are factory rent, depreciation, supervision and power.
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