COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Charged to overhead expenses at the time of purchase
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Charged to machinery account
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Charged to jobs during the period of purchase
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Charged to costing Profit and Loss account
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Detailed explanation-1: -Overhead costs, also called “overhead expenses” or “operating expenses", are expenses associated with running a business that can’t be linked to creating or producing a product or service. They are the expenses the business incurs to stay in business, regardless of its success level.
Detailed explanation-2: -In accountancy terms, head office overheads are generally referred to as administrative expenses, whereas the direct costs of production are referred to as costs of sales.
Detailed explanation-3: -Overhead is the cost incurred in the course of making a product, providing a service, or running a department, but which cannot be traced directly and in full to the product, service, or department.
Detailed explanation-4: -This is known as cost apportionment. It is the distribution of different cost items in proportions to the cost unit or cost centre on a suitable basis. Apportionment of cost refers to the distribution of various overhead items, in proportion, to the department on a logical basis.