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Classifying costs as factory overhead Which of the following items arc properly classified as part of factory overhead for Ford Motor Company, a maker of heavy automobiles and trucks? A. Plant manager's salary at Buffalo. New York stamping plant, which manufactures auto and truck subassemblies B. Depreciation on Flat Rock, Michigan, assembly plant C. Dividends paid to shareholders D. Machine lubricant used to maintain the assembly line at the Louisville. Kentucky, assembly plant E. Leather to be used on vehicles that have leather interiors F. Depreciation on mechanical robots used on the assembly line G. Consultant fees for a study of production line efficiency H. Dealership sales incentives I. Vice president of human resources's salary J. Property taxes on the Dearborn, Michigan, headquarters building

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Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

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Section
BuyFindarrow_forward

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
Chapter 16, Problem 16.3EX
Textbook Problem
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Classifying costs as factory overhead

Which of the following items arc properly classified as part of factory overhead for Ford Motor Company, a maker of heavy automobiles and trucks?

  • A. Plant manager's salary at Buffalo. New York stamping plant, which manufactures auto and truck subassemblies
  • B. Depreciation on Flat Rock, Michigan, assembly plant
  • C. Dividends paid to shareholders
  • D. Machine lubricant used to maintain the assembly line at the Louisville. Kentucky, assembly plant
  • E. Leather to be used on vehicles that have leather interiors
  • F. Depreciation on mechanical robots used on the assembly line
  • G. Consultant fees for a study of production line efficiency
  • H. Dealership sales incentives
  • I. Vice president of human resources's salary
  • J. Property taxes on the Dearborn, Michigan, headquarters building

To determine

Factory Overhead Cost:

Factory overhead cost is the cost other than the direct material cost, and the direct labor cost which is not directly involved in the production of converting the raw materials to the finished products. If the direct material cost or direct labor cost does not constitute the major portion of the total cost of the finished product, then it may be classified as the factory overhead cost. For example: Cost of repairing, and maintaining factory equipment.

To indicate: Whether the given items are properly classified as part of factory overhead cost for Company F.

Explanation of Solution

For (a), (b), (d) (f) and (g):

These costs would be reported under the factory overhead cost, since these are the cost (other than the direct material cost, and the direct labor cost) which is not directly involv...

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Chapter 16 Solutions

Financial & Managerial Accounting
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Ch. 16 - Management process Three phases of the management...Ch. 16 - Management process Three phases of the management...Ch. 16 - Direct materials, direct labor, and factory...Ch. 16 - Direct materials, direct labor, and factory...Ch. 16 - Prime and conversion costs Identify the following...Ch. 16 - Prime and conversion costs Identify the following...Ch. 16 - Product and period costs Identify the following...Ch. 16 - Product and period costs Identify the following...Ch. 16 - Cost of goods sold, cost of goods manufactured...Ch. 16 - Cost of goods sold, cost of goods manufactured...Ch. 16 - Classifying costs as materials, labor, or factory...Ch. 16 - Classifying costs as materials, labor, or factory...Ch. 16 - Classifying costs as factory overhead Which of the...Ch. 16 - Classifying costs as product or period costs For...Ch. 16 - Concepts and terminology From the choices...Ch. 16 - Concepts and terminology From the choices...Ch. 16 - Classifying costs in a service company A partial...Ch. 16 - Classifying costs The following report was...Ch. 16 - Financial statements of a manufacturing firm The...Ch. 16 - Manufacturing company balance sheet Partial...Ch. 16 - Cost of direct materials used in production for a...Ch. 16 - Cost of goods manufactured for a manufacturing...Ch. 16 - Cost of goods manufactured for a manufacturing...Ch. 16 - Income statement for a manufacturing company Two...Ch. 16 - Statement of cost of goods manufactured for a...Ch. 16 - Cost of goods sold, profit margin, and net income...Ch. 16 - Cost flow relationships The following information...Ch. 16 - Uses of managerial accounting in a service company...Ch. 16 - Classifying costs The following is a list of costs...Ch. 16 - Classifying costs The following is a list of costs...Ch. 16 - Cost classifications for a service company A...Ch. 16 - Manufacturing income statement, statement of cost...Ch. 16 - Statement of cost of goods manufactured and income...Ch. 16 - Classifying costs The following is a list of costs...Ch. 16 - Classifying costs The following is a list of costs...Ch. 16 - Cost classifications for a service company A...Ch. 16 - Manufacturing income statement, statement of cost...Ch. 16 - Statement of cost of goods manufactured and income...Ch. 16 - Ethics and professional conduct in business H....Ch. 16 - Financial versus managerial accounting The...Ch. 16 - Managerial accounting in the management process...Ch. 16 - Classifying costs Geek Chic Company provides...Ch. 16 - Using managerial accounting information The...

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