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BHUBANESWAR
SESSION:-2019-20
COST ACCOUNTING
A PROJECT REPORT ON
DISTRIBUTION OF OVERHEAD
SUBMITTED BY :-
NAME:- NAYAN CHAND SOREN
CLASS:-+22nd YEAR COMMERCE
COLLEGE ROLL NO.:-IC8-016
REDG. NO.:-MZ07C18028
GUIDED BY:-
MR. ASHISH KUMAR LENKA
(LECTURER IN COMMERCE)
NAME OF THE EXAMINATION:-+2 CHSE BOARD EXAMINATION 2020
SIGNATURE OF STUDENT WITH DATE:
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ACKNOWLEDGEMENT
I would like to express my gratitude and appreciation to all those who gave me the
golden opportunity to complete the project. A special thanks to my teacher Mr. Ashish
Kumar Lenka whose help , stimulating suggestion and encouragement helped me to co-
ordinate my project especially in writing the project report.
I owe my deep gratitude to our project guider to my teacher , who took keen interest
in our project work and guided us all along till the completion of our project work.
I would like to acknowledge with much appreciation to crucial role of all staff member
who gave the permission to use all required accessories to complete my project work.
I will not forgot to remember friends and family members for their encouragement
and more over for their support and guidance
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DECLARATION
I do hear by declare that all the information provided in the project are my own and the
project is a result of my hard work and dedication . This work has not been submitted
before and all the information provided in the project is true and best of my knowledge
and belief .
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CERTIFICATE
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CONTENT
S.L. NO. PARICULARS PAGE NO.
1. Introduction 07
4. Comprehensive Problem 10
5. Allocation of Overheads 11
8. Conclusion 14
9. Bibliography 15
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INTRODUCTION
When any expenditure which cannot be directly charged to any job , operation or
process , such expenditure is called overhead . Thus indirect expenditure of any kind is
indicated by overhead. Indirect materials, indirect wages & indirect expenses are included
in overhead.
Overhead is defined by different authors in different languages, but the same sense
is carried by each definition.
In many case what is a direct cost & what is an item of overhead are matters
of judgment. For example, during a given period, from the electric meter of a department,
the cost of electricity consumed by the department is known; but detailed technical
arrangements are required if it is needed to know each cost centre or cost unit wise, cost
of consumption of electricity. In the circumstances stated above, arrangement may be made
by the management of one factory at some cost, while because of the amount of cost
involved; another factory’s management may consider it undesirable. Thus, in the former
factory, cost of electricity can be treated as direct cost; the same shall be treated by the
later factory as indirect cost, i.e. overhead. Thus, generally it can be said that depending
upon the decision, on the basis of economic & other considerations, some items of cost
may be treated in one organization as direct cost & in another organization as indirect
cost.
Thus, in many cases, distinction between direct cost & indirect cost is not possible.
The expense is treated as overhead, where in relation to a cost centre or cost unit, the
process of making direct measurement of an expense is considered wasteful or where no
acceptable method of such measurement is there.
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STEPS IN DISTRIBUTION OF
OVERHEAD
To ascertain the total cost , overheads are added to the prime cost . The overheads
which cannot be specifically related to cost unit , are to be apportioned to various
departments and then to cost centres or production unit . Following steps are involved in
this procedure .
1.Collection of overheads
2.Classification of overheads
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BASES OF APPORTIONMENT
The basis used for the apportionment of costs between a number of cost centres when the costs
are to be shared between them equitably. This occurs when an overhead cannot be directly assigned
to one particular cost centre. For example, rent and business rates are seldom incurred by individual
cost centres, therefore floor area is often used as a basis of apportionment to share the costs
between appropriate cost centres.
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COMPAREHENSIVEVE PROBLEM
The Ruchi Company has the following account balances and distribution of direct charges
as on 31st March 2017 .
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ALLOCATION OF OVERHEADS
Solution :
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SCHEDULE OF APPORTIONED
EXPENSES
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DISTRIBUTION OF SERVICE
DEPARTMENT EXPENSES
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CONCLUSION
It’s almost impossible to run a business without some overheads . But these
operating cost can be minimized or eliminated in many cases , leaving us with more profits
in our pockets . A Business with streamlined operating expenses will have the best possible
chance for success . Allocation and apportionment of overheads helps for finding total cost
of production for better decision making for cost control and cost reduction .
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BIBLIOGRAPHY
https//SlideShare.com
https//Wikipedia.com/distribution-of-cost
https//www.accountingnotes.net
S.P. Jain , K.L Narang , Simmi Agrawal and Monika Sehgal : 2016 : Elements of Cost
Accounting : IV/1.3-1.41 :
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THANK YOU
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