Handout 3 Flashcards
(26 cards)
This pertains to the labor of the employees which directly contributes in making a
particular product.
Direct labor
This pertains to the labor of the employees which does not contribute to the
construction, composition, or the condition of a particular product.
Indirect labor
These include the basic wages or the basic rate of pay. These also include allowances, overtime pay, bonuses, holiday pay, government mandated benefits and special incentives that are being given by an organization or company to their respective employees.
Monetary Benefits
These include hospital facilities, subsidized food, subsidized or free
transport, and recreational facilities that are being provided by an organization to their
employees.
Non-monetary Benefits
These involve the benefits which are not paid in a given month but
in the future time. Examples of these benefits include pension and gratuity among others.
Deferred Monetary Benefits
This comprises the indirect material cost, indirect wages, and indirect
expenses incurred with respect to the manufacturing activity.
Production overhead
This comprises indirect material, indirect wages and indirect expenses
incurred with respect to the management of an organization.
Administration overhead
This comprises the indirect material cost, indirect wages,
and indirect expenses incurred on the research and development activities of an organization.
Research and development overhead
This comprises the indirect material, indirect wages, and indirect expenses which are incurred for creating and stimulating demand for a firm’s products.
Selling overhead.
This comprises the indirect material, indirect wages, and indirect expenses
incurred for making a firm’s products available to customers.
Distribution overhead
These are materials which cannot be measured in any standardized physical units but are essential for the smooth running of the manufacturing process.
Indirect materials
This pertains to the costs which do not alter the construction or composition of a product.
Indirect labor
These are costs which cannot be directly allocated to cost units.
Indirect expenses
This pertains to the costs which remain constant per unit.
Variable overhead
This pertains to the costs which remain unaffected by the change in the volume
of output.
Fixed overhead
This pertains to the costs which are partly fixed and partly variable. Some overheads possess characteristics of both fixed and variable costs.
Semi-variable overhead
This is the aggregate of the costs of formulating the policy, directing
the organization, and controlling the operations of an undertaking which is not directly related to
production, selling, distribution and research or development, or any other function.
Administration overhead
This is the aggregate of indirect materials, indirect wages, and indirect expenses incurred for creating and stimulating demand for a firm’s products, securing and executing the orders.
Selling overhead
These involve the direct distribution of traceable overheads to a particular job
or department.
Direct allocation
These involve the apportionment of overheads on the basis of direct labor hours for different departments.
Labor hours
These involve distributing overheads on the basis of machine hours relevant to the activities which are entirely dependent on machinery.
Machine hours
This involves the apportionment of overheads that are incurred for the welfare of workers on the basis of the number of employees in each department.
Number of staff
This involves the apportionment of overhead expenses such as rent, tax, lighting, and building-maintenance expenses on the basis of the space occupied by different departments.
Floor area
This involves the apportionment of overheads like depreciation, insurance
premium, repairs, and maintenance on the basis of the capital value of assets.
Capital value
