ACCOUNTING FOR OVERHEADS

Accounting for Overheads- Nokia and Carphone Warehouse Retail

Accounting for Overheads- Nokia and Carphone Warehouse Retail

Introduction to Accounting for Overheads

The study is related to the accounting for overheads which are the indirect costs of the day-to-day running of a business, i.e. not money spent on producing goods, but money spent on such things as renting or maintaining buildings and machinery. Moreover, the study particularly focuses on the accounting for overheads of Nokia and Carphone Warehouse Retail. In this context, in the construction costs of the organization and management of production are called overhead. Overhead costs, depending on their relationship with the volume of production are divided into fixed and variable. The list of overhead costs is presented in the annex to the standard guidelines of the suspects include five sections:

Administrative costs

Maintenance costs of construction workers

The costs for the organization of work on construction sites

Other overhead costs

Costs not covered in the rules.

In each group overheads are some articles when planning the size of which is determined either by calculation procedure, taking into account the proposed scope of work, or on the basis of the established view on the costs of the rules and regulations in force in this area or developed by the organization itself. When planning a set limit on the overhead for the organization which is determined based on the value of construction work expected to perform in accordance with the contracts and in the% overhead in these treaties (Jane, 2008, 25-28).

Accounting of Overheads is one of the most important & technical aspect of Cost accounting. From Cost reduction & Cost control point of view, overhead play a great role. So, proper understanding of computation and accounting of overhead is must for mangers of both Nokia and Carphone Warehouse. Overheads is the aggregate of indirect materials cost, indirect labour cost and indirect expenses which cannot be conveniently identified with and directly allocated to a particular cost centre or cost object. In addition to this, apportionment of overheads is the process of charging the proportion of common items of cost to two or more cost centres on some equitable basis (John, 1996, 15-17). Moreover, the principles for apportionment of overheads include actual benefit, potential benefit, ability to pay and specific criteria/survey method. Accounting for actual expenses incurred is part of the reporting period (Aguilar, 2003, 44-49). At the end of the reporting period, the overhead should be distributed among all the objects under construction, according to the selected base distribution, so the overhead cost of the actual fall in the volume of completed construction works for each object. Such consistency in accounting for overhead costs to determine the total amount of overhead actually incurred during the reporting period and compared with the established limit and establishes the full cost of construction works for each object. Accounting for overhead costs associated with the production of construction works, production of goods and provision of services ancillary industries, as well as the implementation of non-capital works ...