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What are factory
Explain the meaning of factory overhead expenses, and indicate the way in which it distinguishes from other manufacturing costs. Indicate the other term that is used to describe factory overhead expenses.
Explanation of Solution
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.
Explain the meaning of factory overhead expenses, and indicate the way in which it distinguishes from other manufacturing costs. Indicate the other term that is used to describe factory overhead expenses:
The Factory overhead expenses are the expenses that are incurred in the process of production however that cannot be recognized directly with the finished product. Thus, this distinguishes the factory overhead expenses from direct materials and direct labor which apply directly to the product being manufactured.
Factory overhead expenses are also described as indirect factory expense, indirect manufacturing costs, and factory burden. However, in short factory overhead is often referred to merely as “overhead.”
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PRIN.OF COST ACCOUNTING-W/ACCESS
- What are the sources for posting indirect labor cost to the indirect labor account in the factory overhead ledger?arrow_forwardWhich of the following is a prime cost? A. direct labor B. work in process inventory C. administrative labor D. factory maintenance expensesarrow_forwardWhat are the distinguishing characteristics of variable, fixed, and semivariable factory overhead costs?arrow_forward
- Why are the overhead costs first accumulated in the manufacturing overhead account instead of in the work in process inventory account?arrow_forwardWhich of the following would not be classified as manufacturing overhead? A. indirect materials B. indirect labor C. direct labor D. property taxes on factoryarrow_forwardWhat factory operating conditions and data are required for each of the traditionally used methods for applying factory overhead to products? Discuss the strengths and weaknesses of each method.arrow_forward
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- Assigning indirect costs to specific jobs is completed by which of the following? applying the costs to manufacturing overhead using the predetermined overhead rate using the manufacturing costs incurred applying the indirect labor to the work in process inventoryarrow_forwardIn a job order cost system, direct labor and factory overhead applied are debited to individual jobs. How are these items treated in a process cost system and why?arrow_forwardDuring production, to what are the costs in job order costing applied? A. manufacturing overhead B. cost of goods sold C. each individual product D. each individual departmentarrow_forward
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