Introduction to overhead

The total expenditure which is incurred in the process of production or providing services is called overhead costs may be classified as : 

A . direct cost 

B. indirect cost .

                        A direct cost :

                     The expenditure which is directly involved in production is called direct cost . This cost is either attributable to or identifiable with  the particulars unit or cost center and  it is the main feature of direct cost . Direct materials , direct labour and direct expenses are included cost . 

                B. Indirect cost :

                 Beside direct expenditure , there are several other expenditure which cannot be identified with a particular unit of cost . these expenditure are incurred the production , but they are not attributable with a particulars unit of output . These expenditure are called indirect expenditures , overhead expenses or establishment expenses. These expenses are incurred inside as well as outside the factory .Rent of building , lighting and heading charge ,office salaries, or selling expenses are examples of indirect cost .