Importance of Overhead Costs

Overheads are an integral part of total expenses and cost of any organisation. Especially in the service based organisation where there is no manufacturing still the cost of service is quite high. Why? Due to overhead costs. As we know that overhead costs sometimes cannot be allocated to the products, services and departments but the fact that all the cost drivers are getting benefit from the overhead expenditure. It becomes important to ascertain and allocate the appropriate amount of overhead to the each cost element or driver.

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