Question

Explain various types of Overheads.

Mention any three types of overheads with an example of each.

Answer 1

1. Factory or Manufacturing Overheads: Indirect materials (e.g., grease, oil, consumable stores), indirect labour (e.g., storekeeper salary), and indirect expenses (e.g., power and fuel) used in connection with the 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., office manager salary), 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 the sale and distribution of goods and services are called selling and distribution overheads.