Page 10 - PPT-10

OVERHEAD EXPENSES:

 These extra expenses include shipping and delivering charges of

commodity, insurance, repairs, rent, taxes, etc. These extra

expenditures are known as overhead expenses.

 EXAMPLE:



Suppose a shopkeeper buys an almirah from retailer at a cost

price of Rs 12,000. He needs to spend Rs 300 on its
transportation. Then he spends Rs 500 on its maintenance. Now,

these extra amount that shopkeeper pays other than the cost
price, i.e., in transportation and maintenance, is known as

overhead expenses. All these extras will be added into the cost

price of the almirah. So, the total cost price of the almirah
becomes Rs 12,000 + Rs 300 + Rs 500 = Rs 12,800. Now, the

shopkeeper sells this almirah at a price of Rs 13,500 to a customer.

Hence, in the deal shopkeeper has a profit of Rs 700.