Collection of Overheads

 

The process accounting of overheads starts with process of collection of overheads and their grouping together on the basis of common characteristics and specific objectives i classification of overheads. systematic classification and scientific codification are the pre-requisite to the collection of overhead.

Source document used for collection of overhead costs:-

1.Store Requisition - The indirect materials such as lubricating oil, dusters, furnace oil, brooms, cotton waste, grease, wipers, soaps and detergent, brushes, disinfectants, repairs and maintenance of stores, general tools, can be ascertained from store requisition

2. Invoices:- the indirect expenses such as rent, rates, taxes, insurance etc are incurred for other services availed can be verified from invoices.

3.Wages Analysis Book:- the indirect wages such as wages of foreman, sweepers, Inspector, Watchmen,Repair gang, Maintenance workers, Shop supervisor etc can be taken from the wages analysis book.

4.Cash book:- the various types of indirect expenses incurred for factory, office and administration,selling and distribution activities of sizeable amount in cash get recorded in the main  cash book. All such expenses can be collected from the cash book.

5. Petty cash book:- the different types of indirect expenses incurred for factory, office and administration, selling and distribution activity of minor amount in cash get recorded in the analytical petty cash book. All such as expenses of small amount can be collected from the petty cash book.

6. Journal Proper:- the various types of overheads which do not result in current cash outlay and requires some accounting adjustments can be obtained from journal proper. e.g outstanding overhead expenses, prepaid expenses etc.

7. Other Registers :- depreciation on plant can be obtained from plant and machinery register, Repairs to premises can be obtained from land and buildings Register, maintenance on furniture can be obtained from furniture, fixture and fitting register. 

8. Special reports:- generally, there is a practice to prepare a special report periodically regarding normal and abnormal items of overheads i e. normal and abnormal Weste, scrap, spoilage detectives,ideal time, overtime, night shift allowance etc. from the special reports.