COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Depreciation on manufacturing equipment.
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Labour of wage workers who manufacture the goods.
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Rent of the administrative department.
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Salary of the factory manager.
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Detailed explanation-1: -Manufacturing overhead does not include any of the selling or administrative functions of a business. Thus, the costs of such items as corporate salaries, audit and legal fees, and bad debts are not included in manufacturing overhead.
Detailed explanation-2: -This includes the costs of indirect materials, indirect labor, machine repairs, depreciation, factory supplies, insurance, electricity and more. Manufacturing overhead is also known as factory overheads or manufacturing support costs.
Detailed explanation-3: -Usually manufacturing overhead costs include depreciation of equipment, salary and wages paid to factory personnel and electricity used to operate the equipment.
Detailed explanation-4: -What Is Factory Overhead? “Factory overhead” is how much it costs to produce a company’s products, not the labor and materials it takes to directly create the widget.