Question

Name and explain any two types of overheads.

Answer 1

1. Factory (Manufacturing) Overheads: These are the indirect costs of the production process. They are required to run the manufacturing plant but do not immediately contribute to the production of any particular unit. Factory overheads include the following:
   • Indirect materials include grease, oil, and consumable stores.
   • Indirect labour includes the pay of the storekeeper, foreman, and supervisors.
   • Indirect expenses include factory rent, power and fuel, and depreciation of plant and machinery.
2. Office and Administrative Overheads: These are the indirect costs associated with the overall management and administration of the business. They are required for the daily administrative operations that support production and sales. They include:
   • Indirect materials include printed material and stationery. Indirect labour includes the wage of the office manager and administrative workers.
   • Indirect expenses include office rent, audit fees, legal fees, and depreciation on office equipment.