Production Overhead - Accounting Media

Production Overhead

1) Rent of building and land. When the manufacturer owns the property a charge equivalent to rent may be made.

2) Rates imposed by local authorities.

3) Insurance on
(i) Factory property
(ii) Machinery
(iii) Fixed annual charge (if any) for automatic fire alarms, sprinkler installation.

4) Depreciation on:
(i) Plant and machinery
(ii) Buildings.

5) Salaries for managers and principal officials are often included

6) Interest on capital to the extent (if any) it is included as an item of cost.

7) Maintenance and repairs (which includes materials and labour used by maintenance service departments plus the overhead apportioned to these departments) of buildings, plant, machinery etc.

8) Oiling and cleaning machinery, shafting, motors, etc

9) Miscellaneous operating supplies (consumable stores)

10) Cotton waste, cloths for wiping

11) Belt-dressing, fasteners, etc.

12) Brushes for sweeping, dusting, scrubbing.
(i) Oil, benzene, emery and sand-paper, carborundum dust
(ii) Cleaning

14) Perishable tools, small taps, dies, drills, files, emery wheels, polishing wheels, oil-tones, saw blades, reamers, etc

15) Waiting time (=idle time). viz:
I. Machinery breakdown
II. Power-supply failure
III. Waiting for work instructions IV. Accident to workers
V. Waiting for material
VI. Waiting for tools, et

(16) Holiday and sickness with pay.

(17) Stocktaking and stores physical check expenses.

(18) Inspection and testing.

(19) (i) Experimental and research work
(ii) Designing for production.
(iii) Drawing-office expenses.

(20) Timekeeping and gate control.

(21) Supervision: foreman, assistants, superintendents.

(22) Shop clerical work, labour and stationary.

(23) Shop laboring, general indirect; shop cleaning, etc.
(i) Carriage inwards (unless added to the price of materials)
(ii) Storekeeper and assistants
(iii) Other charges, e.g. branding, measuring and cutting off materials for issue, but not expenses particular to a specific order.

(24) Training and instructing new employees

(25) Welfare; ambulance and first aid; canteens

(26) Waste-spoilt and lost materials, stock discrepancies, faulty work, etc.

(27) Insurance
(i) National
(ii) Machinery breakdown, etc.

( 28 ) Overtime expenses (except when a direct charge) (z) Services.
(i) Power of all kinds
(ii) Steam service
(iii) Lighting
(iv) Heating
(v) Other services, e.g. fire protection, internal transport.