Costing and Taxation · Class 12 Commerce

Ch 5Basic Concept of Overhead — Class 12 Costing and Taxation, concept-first.

Classification of Cost (Cost Sheet) already introduced Overhead briefly, as the sum of every Indirect cost — Indirect Material, Indirect Labour, and Indirect Expenses — that cannot be conveniently and specifically traced to one particular unit of output.

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Overhead: Meaning, Classification and Importance

Overhead is the aggregate of Indirect Material, Indirect Labour, and Indirect Expenses — cost that cannot be traced to one specific unit and must be distributed across the units/departments sharing it.

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Chapter contents

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5.A

Overhead: Meaning, Importance, Classification and Distinction from Prime Cost

5.B

Allocation and Apportionment: Primary Distribution of Overhead

Once Overhead items are collected for a period (by nature, from the books of account), the next task is distributing each item across the various departments (cost centres) of the factory that share i…