Question

What Are Overheads? How Are They Classified?

Answer 1

Answer:

Explanation:

What is Overhead?

Overhead is the cost of material, labour and expenses, which cannot be easily identified with any, job or process.

The costs, which cannot be identified or linked or attributed or allocated to the cost, centre or cost unit are termed as overhead. Therefore, overhead is the aggregate of indirect material cost, indirect wages and costs of indirect service.

Small amounts can be traced into a specific units of production included in the overhead. The treatment of costs as overhead is the purely judgment of the management.

In nutshell, overhead is the mix of indirect materials, indirect wages and expenses

How Are They Classified?

Overhead is the cost of material, labour and expenses, which cannot be easily identified with any, job or process. ...

Therefore, overhead is the aggregate of indirect material cost, indirect wages and costs of indirect service. Small amounts can be traced into a specific units of production included in the overhead.