Concept Of Overheads And Overhead Variance

Capsul Tube

Thursday, February 17, 2011

Overheads
Besides prime costs, other indirect expenses may be incurred in the process of production or providing services, such expenses are denoted by a broad term i.e. overhead expenses. All the indirect expenses incurred in order to bring the goods to salable condition are termed as 'overheads' or 'supplementary costs.

Overhead Variance
The overhead variance is the deviation from the standard costs of overhead allowed for the actual output achieved and actual overhead costs incurred. With a view to conveying the useful information to control the overhead expenses, overhead variances can be classified as follows:
* Capacity or Volume variance
* Spending variance
* Efficiency variance

insurance accounting