Question

Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labour costs, are called:
A. Administrative expensesB. Nonmanufacturing costsC. Sunk costsD. Factory overheadE. Preproduction costs

Answer 1

Answer:

The answer is D. Factory overhead

Explanation:

Factory overheads are cost that cannot be traced to a specific unit. It is also called manufacturing overhead.

It relates to indirect materials and/or indirect cost. For example, water, electricity, cleaning. All these cost are not directly related to a specific unit, they are consumed by the whole business operations.