The following data were taken from the cost records:   Depreciation, factory 7000 Indirect labor 11000 Utilities, factory 5000 Insurance factory 1500 Lubricants for machines 1000 Direct Labor 21000 Purchases of raw materials 16000 Depreciation, Office furniture 700 Inventories at the beginning and end of the year were as follows:   1-Jan 31-Dec Raw materials 1500 2500 Work in process 3000 1000 Finished goods 4000 6000     Sales recorded during the year amounted Rs. 7,7000. Required: a. Prepare a Statement of Cost of Goods Manufactured for the year. b. Prepare a statement of Cost of Goods Sold for the year and calculate Gross profit.

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.