MMAC Section 4: Overheads

Question 1

What are Overheads?

Answer 1

Expenses that can NOT be directly attributed to a product

1. Production expenses; rent, heat & light, machinery depreciation
2. Selling & Distribution expenses; Advertising, packaging & delivery
3. Administration expenses; Office rent, phone bills, postage, auditors fees

Question 2

Prime Costs?

Answer 2

Direct Materials + Direct Labour = Total Direct Costs

PRIME COSTS

Question 3

Overheads?

Answer 3

Indirect Materials + Indirect Labour + Indirect Expenses = Total Indirect Costs

OVERHEADS