Name and explain any two types of overheads.

The two main types of overheads are:

1. Factory (Manufacturing) Overheads — These are the indirect costs associated with the production process. They are necessary to operate the manufacturing facility but do not directly contribute to producing any specific unit. Factory overheads include:

• Indirect materials such as grease, oil and consumable stores.
• Indirect labour such as wages of the storekeeper, foreman and supervisors.
• Indirect expenses such as factory rent, power and fuel, depreciation of plant and machinery.

2. Office and Administrative Overheads — These are the indirect costs related to the general management and administration of the business. They are necessary for the day-to-day administrative functioning that supports production and sales. They include:

• Indirect materials such as printing and stationery.
• Indirect labour such as salary of the office manager and administrative staff.
• Indirect expenses such as office rent, audit fees, legal fees and depreciation of office equipment.

(A third type — Selling and Distribution Overheads — relates to costs of marketing, selling and distributing the product, e.g., advertising, sales commission, packing and warehousing charges.)