Suppose a student study 7 subjects in CA IPC. He purchase books for each
subject and takes classes for each subject.
So Can you find out cost per
subject? Answer is “NO”. Since what about cost of PENs which he uses
for all the subject. “How the cost of PENs should be distributed over 7
subjects” is the subject matter of chapter Overheads. Overhead means charging
of all indirect cost over main products using different basis for absorption.(Overhead
absorption rates)