In the process of production at the enterprise, costs arise that are not directly attributed to a specific cost object. They are attributed to overhead costs. In addition to the costs of managing the workshops (departments, sections) of the main and auxiliary industries, they include those for the operation and maintenance of machinery and equipment for general production purposes.
Overhead costs include:
1. Costs intended for production management:
- salary of the apparatus for managing plots, workshops, structural units ;
- deductions for health insurance, social events;
- to pay for business trips of workers at sites and workshops.
2. Depreciation of fixed assets and intangible assets of district and workshop purposes.
3. The cost of servicing assets for general production purposes:
- repair and maintenance;
- operating lease;
- insurance.
4. The costs of organizing production and improving production technology:
- salaries of employees;
- deductions to social funds;
- costs intended to improve the product, increase its reliability and other operational characteristics;
- payment for services and work of third parties.
5. Costs intended for the maintenance of production facilities (lighting, heating, drainage and water supply, other utility costs) and the production process (salaries of general production personnel, deductions for health insurance and social events).
6. Costs of safety, technological control, environmental protection and labor.
7. Other costs:
- shortages from work in progress, from damage and loss of material assets;
- the costs of moving materials, raw materials within the enterprise;
- pay for downtime.
The distribution of overhead costs has some features. Since these costs are referred to as indirect costs, it is economically feasible to distribute them and tied to such a concept as normal power. By this concept is meant the expected average volume of production activity achieved under the condition of ordinary activity over several operating cycles or years. At the same time, the planned volume of production services is taken into account. Normal power is determined by the organization on its own. Overhead costs are calculated based on the standard capacity. They are divided into variables and constants. The company establishes the composition and list of these indicators independently.
Variable costs are the costs of managing and servicing production, which vary in proportion to adjustments in production volumes. They are distributed to all cost objects using the selected distribution base (production volumes, wages, hours of work) based on the received actual capacity of the enterprise in the reporting period. Thus, they are fully included in the cost of production.
Fixed costs are costs for the management and maintenance of production, which are quite stable (despite changes in production volumes). They are distributed to cost objects using a special base (production volumes, wages, hours of work), based on the calculated normal capacity of the enterprise. Unallocated fixed costs are included in the cost of production in the period when they arose. The cost of products sold includes the difference between actual fixed costs and their amount, calculated according to normal production capacity. If there are several shops or units at the enterprise, overhead costs are distributed in their context.
Accounting for overhead costs is based on:
- the selected cost allocation base;
- calculated normal power;
- the total planned value of overhead costs with their breakdown into fixed and variable.
Their accounting is carried out on the account 25 "General expenses".