Diiference between Product Cost and Overhead Cost

[Former Member]

Sir,

Can u please explain the difference betwee Product cost and Overhead cost in detail

If possible please provide the document

Thanking You

Juhi sinha

[Former Member]

Hi Juhi,

Product Cost includes the cost of Ram material + Manufactiuring overheads+ Production overheads + Activity cost...

Example of overhead costs are : Mateial Overhead which can be caluclated on materail ( Ex 5% on material consumed)

Production overheads: can be calculated as 5% on wages etc

Hope it will help

Best Regards

Ashish Jain

[Former Member]

Hi

Product Costing is arriving at the Cost of Producing a particular material. For example

Raw Material 1 +

Raw Material 2 +

Overheads

Cost of Labour deployed +

Cost of Other over head like Electricity exp.

Overhead Cost

Overhead Cost like/expenses which are incurred in process of maufacturing or rendering services are Overheads. We can term labour & electricity in process of manufacturing as overheads. Overheads are normally flow into CO thru COst Objects (Cost Center, Internal Orders, Profitability segments)

Thanks

Colin Thomas