COST ACCOUNTING
MANUFACTURING OVERHEAD
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Direct materials, direct labour, variable overhead and fixed overhead
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Direct material, direct labour and variable overhead.
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Direct material, direct labour fixed overhead.
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Direct materials, indirect materials, direct labour and variable overhead.
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Detailed explanation-1: -The three general categories of costs included in manufacturing processes are direct materials, direct labor, and overhead.
Detailed explanation-2: -Manufacturing costs fall into three broad categories of expenses: materials, labor, and overhead. All are direct costs. That is, the salary of the company accountant or the accountant’s office supplies are not included, but the salary and supplies of the foreman are.
Detailed explanation-3: -These overhead costs aren’t influenced by managerial decisions and are fixed within a specified limit based on previous empirical data. They include equipment depreciation costs during manufacturing, rent of the facility, land used for inventory, and depreciation of the facility.
Detailed explanation-4: -Manufacturing overhead is all indirect costs incurred during the production process. This overhead is applied to the units produced within a reporting period.