Class 7 Maths Overhead Costs
Table of Contents
- Overhead Costs
- Summary
- What’s Next?
In the previous segment, we had a look at cost price and selling price. In this segment of the
chapter ‘Comparing Quantities’, we will look at Overhead Costs.
What are Overhead costs?
Overhead costs are those costs that are not related directly to the production activity and are therefore considered as indirect costs that have to be paid even if there is no production.
For example,
A factory sells a product for ₹ 8 to a customer. But sometimes the customer may have to pay for transportation and also for maintenance of the product. These are called overhead costs, which are added to the original cost of the product.
So, assume the transportation cost per product is ₹ 1 and the maintenance cost for each product is also ₹ 1. So the total cost price for the consumer changes from ₹ 8 to ₹ 10.
Summary
| Overhead prices | Overhead costs are those costs that are not related directly to the production activity and are therefore considered as indirect costs that have to be paid even if there is no production. |
What’s next?
In our next segment of Class 07 Maths, we will have a look at profit and loss percentages.
