ECONOMICS

Detailed explanation-1: -Usually manufacturing overhead costs include depreciation of equipment, salary and wages paid to factory personnel and electricity used to operate the equipment.

Detailed explanation-2: -The wages of factory janitors are considered to be direct labor costs because they are directly related to the manufacturing process. In a manufacturing company, wages and benefits of assembly line workers are period costs.

Detailed explanation-3: -The correct answer is A. The wages paid by the organization towards a janitor’s wages is an indirect cost. This cost cannot be directly allocated to the production process because it is incurred to maintain the factory premises.

Detailed explanation-4: -Definition of factory overhead insurance, electricity, janitorial services, and other expenses of a factory that are allocated to goods manufactured when using an absorption costing system; all manufacturing expenses except direct materials and direct labor.