Question

Name and give examples of any two types of Overheads.

Answer 1

1. Factory or manufacturing overheads: Indirect materials (e.g., grease, oil, consumable stores), indirect labour (e.g., salary of storekeeper) and indirect expenses (e.g., power and fuel) used in connection with production of goods and services are known as factory or manufacturing overheads.
2. Office and administrative overheads: Indirect materials (e.g., printing and stationery), indirect labour (e.g., salary of office manager) and indirect expenses (e.g., office rent) incurred in connection with the management of the organisation are known as office and administrative overheads.
3. Selling and distribution overheads: Indirect materials (e.g., price list), indirect labour (e.g., sales commission) and indirect expenses (e.g., advertising) incurred for selling and distribution of goods and services are called selling and distribution overheads.