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| Fixed and Variable Overhead |
At this stage you are asked to look more closely at the headings for the boiler-house `given in the preceding illustration. Certain items of expenditure may be regarded as being fixed in amount, e.g. depreciation, while others are variable, e.g. coke. Even if the boilers are only lightly used during the dry season the depreciation is still incurred; on the other hand, the use of coke would be greatly diminished. Other expenditures are partially fixed and partially variable.
The effect of these various quantities inherent in the nature of overhead is extremely important to all businesses, and the measurement of what the precise effect is in particular circumstances really constitutes the problem of overhead.
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