OVERHEAD ANALYSIS

What are overhead costs in a business context?

• Expenses necessary for the overall operation of the business
• Costs directly related to the production of goods
• Costs that are not essential for business operations
• Costs that are easily traceable to specific products

How are overhead costs often referred to?

• Direct costs
• Indirect costs
• Variable costs
• Fixed costs

Why is the classification of overhead costs important?

• To simplify financial reporting
• To increase overhead costs
• To avoid decision making
• To monitor and control costs

How are overhead costs classified based on functions?

• Materials, Labor, and Expenses
• Fixed, Variable, and Semi-variable
• Direct, Indirect, and Variable
• Factory, Administration, and Selling

Which of the following is an example of factory overheads?

• Marketing expenses
• Raw material expenses
• Direct labor costs
• Depreciation of machinery

What is classified as indirect materials in overhead costs?

• Salaries of factory workers
• Fuel and small tools
• Marketing expenses
• Direct materials used in production

Which type of overhead costs tend to remain unaffected by fluctuations in production?

• Variable overheads
• Indirect overheads
• Fixed overheads
• Semi-variable overheads

What does the allocation of overhead costs involve?

• Reducing overhead costs
• Distributing indirect costs to various departments
• Increasing direct costs
• Ignoring indirect costs

How are fixed overhead costs defined in the context of business operations?

• Overheads that vary with production volume
• Overheads that are semi-variable in nature
• Costs that remain unaffected by production fluctuations
• Expenses that are directly traceable to specific products

What is the goal of allocating overhead costs in a business organization?

• Distributing indirect costs to various departments
• Reducing operational efficiency
• Ignoring overhead costs
• Increasing direct costs