Control of Administrative Overheads

Mostly administrative overheads are of fixed
nature, and they arise as a result of management policies. These fixed overheads are
generally non-controllable. But at the same time these overheads should not be allowed to
grow disproportionately. Some degree of control has to be exercised over them. The methods
usually adopted for controlling administrative overheads are as follows :
(i) Classification and analysis of overheads by administrative departments according
to their functions, and a comparison with the accomplished results: According to this
method the expenses incurred by each administrative department are collected under
standing order numbers for each class of expenditure. These are compared with similar
figures of the previous period in relation to accomplishment. Such a comparison will
reveal efficiency or inefficiency of the concerned department.