Collection of Overheads
- Manufacturing overheads are collected under suitable standing order numbers and selling & distribution overheads against cost accounts numbers.
- Total overhead expenses so collected are apportioned to service and production departments on some suitable basis.
- The expenses of service departments are finally transferred to production departments. The total overhead of production departments is then applied to products on some realistic basis, e.g. machine hour; labour hour; percentage of direct wages; percentage of direct materials; etc.
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