Concept, Meaning & Classification of Overhead
Overhead is an expenditure of labor, materials or services which cannot be economically identified with a specific sale-able cost per unit.making clothes are examples of materials treated as overhead. The overhead cost plays an important role in determination of cost of production as well as the selling price.
Summary
Overhead is an expenditure of labor, materials or services which cannot be economically identified with a specific sale-able cost per unit.making clothes are examples of materials treated as overhead. The overhead cost plays an important role in determination of cost of production as well as the selling price.
Things to Remember
- The term overhead can be defined as the production cost other than direct cost, which is necessary for production but does not become the part of finished goods.
- These costs include, for example, depreciation on buildings and equipment, maintenance, supplies, supervision, materials handling, power, property taxes, landscaping of factory grounds.
The major bases of overhead classification are:
- On the basis of function
- On the basis of behavior/ variability
- On the basis of elements/ nature
- On the basis of control
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Subjective Questions
Q1:
Define DM.
Type: Very_short Difficulty: Easy
<p> </p>
<p>Diabetes insipidus is a disorder of the posterior pituitary gland due to deficiency of Antidiuretic hormone (ADH). It is characterized by failure of the body to conserve water due to deficiency of ADH, decrease renal sensitivity to ADH or suppression of ADH secondary to excessive ingestion of fluid i.e. primary polydipsia</p>
Q2:
List the sign and symptoms of DM.
Type: Short Difficulty: Easy
<li>Polyuria, polydipsia, nocturnal enuresis (cardinal signs)</li>
<li>Thirsty and passes of large quantities of urine</li>
<li>Appetite may be poor or child develops cachexia</li>
<li>Loss of weight</li>
<li>Dehydration</li>
<li>Others:- sleep disturbances, visual disturbances and emotional disorders, hyperthermia</li>
<li>Infants with diabetes insipidus present with excessive crying quieted with water than milk, rapid weight loss, sunken eyes, dehydration, and growth failure</li>
</ul>
<h4> </h4>
<p> </p>
Q3:
What are the complication of diabetes incipidus and how can we diagnose it ?
Type: Long Difficulty: Easy
<h4><br />Dehydration</h4>
<p>Except for primary polydipsia, which causes you to retain too much water, diabetes insipidus can cause your body to retain too little water to function properly, and you can become dehydrated. Dehydration can cause:</p>
<ul>
<li>Dry mouth</li>
<li>Changes in skin elasticity</li>
<li>Low blood pressure (hypotension)</li>
<li>Elevated blood sodium (hypernatremia)</li>
<li>Fever</li>
<li>Headache</li>
<li>Rapid heart rate</li>
<li>Weight loss</li>
</ul>
<h4>Electrolyte imbalance</h4>
<p>Diabetes insipidus can also cause an electrolyte imbalance. Electrolytes are minerals in your blood — such as sodium and potassium — that maintain the balance of fluids in your body. Electrolyte imbalance can cause symptoms, such as:</p>
<ul>
<li>Fatigue or lethargy</li>
<li>Nausea</li>
<li>Loss of appetite</li>
<li>Muscle cramps</li>
<li>Confusion</li>
</ul>
<p> </p>
<p>Diagnosis:</p>
<p>Since the signs and symptoms of diabetes insipidus can be caused by other conditions, your doctor will perform a number of tests. If your doctor determines you have diabetes insipidus, he or she will need to determine which type of diabetes insipidus you have, because the treatment is different for each form of the disease.</p>
<p>Some of the tests doctors commonly use to diagnose and determine the type of diabetes insipidus and in some cases, its cause, include:</p>
<ul>
<li><strong>Water deprivation test.</strong>This test confirms the diagnosis and helps determine the cause of diabetes insipidus. Under medical supervision, you'll be asked to stop drinking fluids for a time so that your doctor can measure changes in your body weight, urine output and the concentration of your urine and blood when fluids are withheld.</li>
</ul>
<p>Your doctor may also measure blood levels of ADH or administer synthetic ADH during this test. The water deprivation test is performed under close supervision in children and pregnant women to make sure no more than 5 percent of body weight is lost during the test.</p>
<ul>
<li>Urinalysis is the physical and chemical examination of urine. If your urine is less concentrated — meaning the amount of water is high relative to other excreted substances — it could be due to diabetes insipidus.</li>
<li><strong>Magnetic resonance imaging (MRI).</strong>An MRI of the head is a noninvasive procedure that uses a powerful magnetic field and radio waves to construct detailed pictures of brain tissues. Your doctor may want to perform an MRI to look for abnormalities in or near the pituitary gland.</li>
</ul>
<p><strong>Genetic screening</strong></p>
<p>If your doctor suspects an inherited form of diabetes insipidus, he or she will look at your family history of polyuria and may suggest genetic screening.</p>
<p>Treatment of diabetes insipidus depends on what form of the condition you have. Treatment options for the most common types of diabetes insipidus include:</p>
<ul>
<li><strong>Central diabetes insipidus.</strong>Because the cause of this form of diabetes insipidus is a lack of anti-diuretic hormone (ADH), treatment is usually with a synthetic hormone called desmopressin. You can take desmopressin as a nasal spray, as oral tablets or by injection.</li>
</ul>
<p>The synthetic hormone will eliminate the increase in urination. For most people with this form of the condition, desmopressin is safe and effective. If the condition is caused by an abnormality in the pituitary gland or hypothalamus (such as a tumor), your doctor will first treat the abnormality.</p>
<p>Desmopressin should be considered a medication you take as needed. This is because in most people, the deficiency of ADH is not complete, and the amount made by the body can vary day to day.</p>
<p>Taking more desmopressin than needed can result in too much water retention and low sodium levels in the blood. Symptoms of low sodium include lethargy, headache, nausea and, in severe cases, seizures.</p>
<p>In mild cases of central diabetes insipidus, you may need only to increase your water intake.</p>
<ul>
<li><strong>Nephrogenic diabetes insipidus.</strong>This condition is the result of your kidneys not properly responding to ADH, so desmopressin is not a treatment option. Instead, your doctor may prescribe a low-salt diet to help reduce the amount of urine your kidneys make. You'll also need to drink enough water to avoid dehydration.</li>
</ul>
<p>The drug hydrochlorothiazide, used alone or with other medications, may improve symptoms. Although hydrochlorothiazide is a diuretic (usually used to increase urine output), in some cases it can reduce urine output for people with nephrogenic diabetes insipidus.</p>
<p>If symptoms from nephrogenic diabetes insipidus are due to medications you're taking, stopping these medicines may help; however, don't stop taking any medication without first talking to your doctor.</p>
<ul>
<li><strong>Gestational diabetes insipidus.</strong>Treatment for most cases of gestational diabetes insipidus is with the synthetic hormone desmopressin. In rare cases, this form of the condition is caused by an abnormality in the thirst mechanism. In these rare cases, doctors don't prescribe desmopressin.</li>
<li><strong>Primary polydipsia.</strong>There is no specific treatment for this form of diabetes insipidus, other than decreasing the amount of fluid intake. However, if the condition is caused by mental illness, treating the mental illness may relieve the symptoms</li>
</ul>
<p> </p>
<p> </p>
Q4:
What are the nursing management of diabetes incipus ?
Type: Short Difficulty: Easy
<ul>
<li>Assessment of child’s general health status including clinical presentation.</li>
<li>Monitor intake and output strictly.</li>
<li>Daily weight measurement.</li>
<li>Parents and child teaching on:</li>
</ul>
<ol>
<li>Disease process along with its consequences.</li>
<li>Drug and hormonal therapy.</li>
<li>Carry of medical identity card tag.</li>
<li>School teachers should be informed by a parent about the child’s condition and the need for the unrestricted use of toilet and drinking water.</li>
<li>Home management.</li>
</ol>
<ul>
<li>Emotional support to the child and parents</li>
</ul>
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Concept, Meaning & Classification of Overhead
Concept and Meaning of Overhead
The term overhead can be defined as the production cost other than direct cost, which is necessary for production but does not become the part of finished goods. The direct cost is easily traceable with output units. These costs include depreciation on buildings and equipment, maintenance, supplies, supervision, materials handling, power, property taxes, landscaping of factory grounds and plant security. These costs do not become the part of the finished goods. However, these costs are essential for the production process.
In some cases, the direct costs are also lumped into the overhead category if they form an insignificant part of the final product. This is justified on the basis of cost and convenience. If the cost of tracing is greater than the benefit of increased accuracy, such type of direct costs are lumped into an overhead category as indirect costs. The glue and nails used in making furniture or toys and the thread used in making clothes are examples of materials treated as overhead.
The institute of Cost and Management Accountant defined overhead as, "Overhead is an expenditure of labor, materials or services which cannot be economically identified with a specific saleable cost per unit."
Classification of Overhead
Overhead can be classified on a variety of ways. The major bases of overhead classification are:
- On the basis of function
- On the basis of behavior / variability
- On the basis of elements / nature
- On the basis of control
On the basis of Function
In the functional classification of overhead, the base of classification is the major activity of the concern. Based on major activities, the overhead can be classified into three categories, overhead incurred in production or factory department, office or administration department and selling and distribution department.
The types of overhead classified on the basis of function are as follows:
- Production or work manufacturing overhead
The indirect expenses incurred in operating manufacturing activities or operating the factory or manufacturing overhead. It includes all the indirect expenses incurred in factory process where the raw materials are converted into finished goods.
- Office / Administration overhead
It is the indirect expenses incurred in maintaining the administration of the whole organization. It includes all the expenses related to the formulation of plans and policies, their effective implementation through proper directions, coordination and controlling of the business activities.
- Selling and Distribution overhead
The indirect expenses incurred for the selling and distribution of finished goods to customers are known as selling and distribution overheads. It includes expenses that are incurred to create and stimulate demand and to distribute the goods.
- Research and Development overhead
Customer’s interest, expectation are changeable day to day. Likewise, newly innovation, speed development of technology and facilitated distribution are challenges for every business concern nowadays. By considering these challenges, business concern should establish research and development department. This department concern with development department, new product, new production planning and finding new needs of customer, etc. The cost is related to research and development department is called research and development cost.
On the basis of Behavior or Variability
The behavioral classification of overhead considers the direction of the overhead in response to a change in the level of output. Based on the behavior, the overheads are either fixed or variable or semi – variable as explained below:
- Fixed overhead
Fixed overhead are those expenses which remain fixed in a total amount of increase or decrease in the volume of output for a given period of time. Fixed overhead cost per unit decreases as production unit increases and vice versa. It shows a negative relationship between production unit and fixed overhead cost per unit. Examples of such expenses are rent of building, salaries, depreciation, interest, etc.
- Variable overhead
Variable overheads are those which vary in direct proportion to the volume of output. There is a positive relationship between production units remains constant with the change in output. There is a positive relationship between production units and variable overhead. E.g. indirect materials, indirect wages, fuel, power, etc.
- Mixed overhead
Expenses which shows both the nature of fixed and variable overhead are called mixed overhead. These expenses are constant up to a certain level of output and the vary with the changes of production units, but they do not fluctuate proportionately to the output units. Examples of such overheads are telephone charges, electricity, repairs and maintenance, etc.
On the basis of Element or Nature
According to the nature or sources of indirect expenditure, the overheads are classified into three types as follows:
- Indirect materials
The materials which cannot be identified with a particular cost unit or cost centre are called indirect materials. They do not form the major component of the finished product. They are not identified with a particular cost centre or cost unit.
- Indirect labour
The wages which are paid to the workers who are not directly involved in the production process is called indirect labor. It cannot be identified with a particular cost unit.
- Indirect Expenses
It includes indirect expenses other than indirect materials and indirect labor. It cannot be identified with a particular cost unit or cost center but can be apportioned to a number of cost centers.
On the basis of Control
On the basis of control, overheads are classified into two types as shown below:
- Controllable overhead
The overhead which is controlled by the decision taken by the management are called controllable overheads. These expenses are influenced by the action of management. Consumable materials, power expenses, lighting expenses, etc. are the examples of controllable overhead.
- Uncontrollable overhead
It is the indirect expenses which are not under the control of management. These expenses are not influenced by the decision or action taken by the management. The examples of uncontrollable overheads are fixed overhead cost like rent, salaries, legal fees, etc.
References:
Koirala, Madhav et.al., Principles of Accounting -XII, Buddha Prakashan, Kathmandu
Shrestha, Dasharatha et.al., Accountancy -XII, M.K. Prakashan, Kathmandu
Bajracharya, Puskar, Principle of Accounting-XII, Asia Publication Pvt. Ltd., Kathmandu
Lesson
Accounting for overheads
Subject
Principles of Accounting
Grade
Grade 12
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