7/21/2019 Variable Overheads Comprise of Expenses Which Vary in Proportion to the Change Of

http://slidepdf.com/reader/full/variable-overheads-comprise-of-expenses-which-vary-in-proportion-to-the-change 1/1

Var iable overheads comp r ise of expenses which vary in prop ort ion to the ch ange

of

volum e of pro duct ion . For example, cost of u t i l i t ies etc.

Fixed overheads comprise of expenses who se value do not ch ange with the

change in

volum e of prod uct ion s uch as salar ies, rent etc.Semi-var iable overheads are part ly affected by change in the prod uct ion volum e.

They are fur ther segregated into var iable overheads and f ixed o verheads

 Any items of overheads arising out of abnormal situation in business activity shouldnot be treated as overheads. They are charged to Costing Profit and Loss Account.Items not related to business activities such as donation, loss / profit on sale of assetsetc are also not to be treated as overheads.