ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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fixed items such as depreciation of manufacturing machinery
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variable items such as plant supplies
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indirect labor such as the salary of the plant supervisor
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direct labor and direct materials
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Detailed explanation-1: -Expert Answer. The correct answer is Option D. Option A: Budgeted manufacturing overhead costs include fixed items such as the depreciation of the manufacturing machines because the assets are being used in the factory or in the production process. Thus, it is directly related to the product.
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: -What is Manufacturing Overhead Cost? Manufacturing overhead (MOH) cost is the sum of all the indirect costs which are incurred while manufacturing a product. It is added to the cost of the final product along with the direct material and direct labor costs.
Detailed explanation-4: -In manufacturing companies, manufacturing overhead includes all manufacturing costs except those accounted for as direct materials and direct labor. Manufacturing overhead costs are manufacturing costs that must be incurred but that cannot or will not be traced directly to specific units produced.
Detailed explanation-5: -Overhead Budget is prepared to forecast and present all the expected costs concerning manufacturing the goods that the company expects to incur in the next year. It excludes the direct material and the direct labor cost, and the information, which becomes part of the cost of the goods sold in the master budget.