If the cost of a direct material is a small portion of total production cost, it may be classified as part of factory Overhead Cost.
What is factory Overhead Cost?
The expenses incurred in the manufacturing process, excluding the costs of direct labor and direct materials, are referred to as factory overhead. Typically, factory overhead is gathered into cost pools and distributed to units produced throughout the time period.
Therefore,
If the cost of a direct material is a small portion of total production cost, it may be classified as part of factory Overhead Cost.
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