If the direct materials 195 000 ID., direct labor 150 000 ID direct other expenses 50 000 ID., indirect materials 80 000 ID., indirect labor 75 000 ID., indirect expenses 65 000 ID.. prime cost 395 000 ID., the - manufacturing overhead are

If the direct materials 195 000 ID., direct labor 150 000 ID direct other expenses 50 000 ID., indirect materials 80 000 ID., indirect labor 75 000 ID., indirect expenses 65 000 ID.. prime cost 395 000 ID., the - manufacturing overhead are

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 6PA: During the year, a company purchased raw materials of $77,321, and incurred direct labor costs of...

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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