# Administrative Overheads
## Definition
Admin OH refers to expenditures incurred in the office, which may or may not be related to production.
## Two Types of Admin OH
### A. Admin OH Related to Production
If the question specifies any of these phrases, treat Admin OH as production-related:
- "Admin OH is related to production"
- "Admin OH is linked to production"
- "Admin OH is given on basis of ₹ per unit produced"
- "Admin OH is given separately" (i.e., separately listed for production)
Treatment: Included while calculating Cost of Production.
### B. Admin OH NOT Related to Production (General Admin OH)
These are office expenses not directly related to the production process.
If the question says "Admin OH is ₹ per unit SOLD" → it is General Admin OH → NOT included in Cost of Production → included in Cost of Sales.
## Examples of Admin OH
| # | Item | # | Item |
|---|---|---|---|
| (i) | Depreciation of Office Building/Furniture | (ii) | Salary of Admin employees / Directors |
| (iii) | Office Rates, Tax, Light | (iv) | Remuneration, Commission |
| (v) | Legal charges | (vi) | Director's Sitting Fees |
| (vii) | Office Stationery | (viii) | Meeting Expenses |
| (ix) | Company's Income Tax | (x) | Audit Fees |
## Quick Decision Rule
| Wording in question | Treatment |
|---|---|
| Per unit produced | Production Admin OH → in Cost of Production |
| Per unit sold | General Admin OH → in Cost of Sales |
| "Related to production" | Production Admin OH |
| Just "Admin OH" | General → in Cost of Sales |