Overhead accounting refers to the systematic process of identifying, collecting, classifying, allocating, apportioning, and absorbing indirect costs incurred in the production of goods or rendering of services. Overheads are those costs which cannot be directly traced to a specific cost unit, cost centre, or job in an economically feasible manner. These include expenses such as factory rent, supervision salaries, depreciation of machinery, power, lighting, insurance, and administrative expenses. Since these costs are essential for production but are not directly attributable to a single unit of output, a scientific method is required to distribute them fairly among different cost centres and cost units. Overhead accounting thus ensures accurate cost determination, effective cost control, and meaningful managerial decision-making. In cost accounting, overheads are generally classified into three broad categories: factory or manufacturing overheads, administrative overheads, and selling and distribution overheads. Manufacturing overheads relate to production activities, administrative overheads pertain to general management and office functions, and selling and distribution overheads are associated with marketing and delivery of goods. Proper accounting of these overheads is necessary to ascertain the true cost of production and to fix appropriate selling prices. The first step in overhead accounting is classification of overheads. In this stage, indirect costs are grouped according to their nature, function, or behaviour. Functional classification divides overheads into production, administration, and selling and distribution categories. Behavioural classification categorizes them into fixed, variable, and semi-variable costs. Fixed overheads remain constant irrespective of output within a relevant range, such as factory rent. Variable overheads vary directly with the level of production,