Overhead Costing CA Inter Sep 24 | Cost and Management Accounting Ch-4 | Overhead Costing One Shot

Overhead Costing CA Inter Sep 24 | Cost and Management Accounting Ch-4 | Overhead Costing One Shot

In this Video We Will Discuss Overhead Costing in Cost Accounting and Management Accounting all concepts, examples, and problems for CA Inter Sep 2024.

⚫ 𝐂𝐀 𝐈𝐧𝐭𝐞𝐫 𝐂𝐨𝐬𝐭𝐢𝐧𝐠 𝐈𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐂𝐨𝐮𝐫𝐬𝐞
https://www.escholars.in/p/ca-inter-c...

⚫ 𝐂𝐀 𝐈𝐧𝐭𝐞𝐫 𝟑.𝟎 𝐁𝐨𝐭𝐡 𝐆𝐫𝐨𝐮𝐩
https://www.escholars.in/p/ca-interme...

⚫ 𝐂𝐀 𝐈𝐧𝐭𝐞𝐫 𝟑.𝟎: 𝐆𝐫𝐨𝐮𝐩 𝟏
https://www.escholars.in/p/ca-inter-g...

⚫ 𝐂𝐀 𝐈𝐧𝐭𝐞𝐫 𝟑.𝟎: 𝐆𝐫𝐨𝐮𝐩 𝟐
https://www.escholars.in/p/ca-inter-g...

⚫ 𝐂𝐀 𝐈𝐧𝐭𝐞𝐫 𝐏𝐞𝐫𝐟𝐞𝐜𝐭 𝐑𝐞𝐯𝐢𝐬𝐢𝐨𝐧 𝐁𝐨𝐨𝐤𝐬
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⚫ 𝐂𝐀 𝐈𝐧𝐭𝐞𝐫 𝐈𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐂𝐨𝐮𝐫𝐬𝐞𝐬
https://www.escholars.in/store/ca-int...

⚫ 𝐂𝐀 𝐈𝐧𝐭𝐞𝐫 𝐒𝐮𝐠𝐠𝐞𝐬𝐭𝐞𝐝 𝐀𝐧𝐬𝐰𝐞𝐫𝐬
https://www.escholars.in/store/ca-int...

⚫ 𝐃𝐨𝐰𝐧𝐥𝐨𝐚𝐝 𝐨𝐮𝐫 𝐄𝐬𝐜𝐡𝐨𝐥𝐚𝐫𝐬 𝐀𝐈 𝐀𝐩𝐩
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Topic Covered:
Introduction to Overhead ca inter sep 24
Basis of Primary distribution
Secondary distribution
Secondary distribution Direct - Redistribution method
Secondary distribution Step method or Non-reciprocal Method
Reciprocal service method - Simultaneous equation method
Secondary distribution Trial and error method
Secondary distribution Repeated distribution method
What is Recovery Rate
Methods of overhead recovery
Overheads ca inter sep 24
Computation of machine hour rate Practice question
Two-tier machine hour rate with question
Machine hour rate Combined Question

Overhead costs refer to all indirect expenses of running a business. These ongoing expenses support your business but are not linked to the creation of a product or service.

Calculating overhead costs is not just important for budgeting but also determining how much the business should charge for a service or product to make a profit. For example, if you have a service-based business, then apart from the direct costs of providing the service, you will also incur overhead costs such as rent, utilities and insurance.

While overhead costs are not directly linked to profit generation, they are still necessary as they provide critical support for the profit-making activities. The overhead costs depend on the nature of the business. For example, a retailer’s overhead costs will be widely different from a freelancer.

Some examples of overhead costs are:
Rent
Utilities
Insurance
Office supplies
Travel
Advertising expenses
Accounting and legal expenses
Salaries and wages
Depreciation
Government fees and licenses
Property taxes
Overhead costs can include fixed monthly and annual expenses such as rent, salaries and insurance or variable costs such as advertising expenses that can vary month-on-month based on the level of business activity.

Some organizations also split up these costs into manufacturing overheads, selling overheads and administrative overhead costs. While administrative overhead includes costs front office administration and sales, manufacturing overhead is all of the costs that a manufacturing facility incurs, other than direct costs.

Direct costs required to create products and services, such as direct labor and materials, are excluded from overhead costs.

Businesses have to take into account both overhead costs as well as the direct expenses to calculate the long-term product and service prices. Doing so allows the business to earn profits on a long-term basis.

How to Calculate Overhead Cost
Overhead Rate = Overhead Costs / Sales

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