Question

2) Manufacturing overhead includes: A) all direct material, direct labor and administrative costs. B) all manufacturing costs except direct labor. C) all manufacturing costs except direct labor and direct materials. D) all selling and administrative costs.

Answer 1

Answer: Option C

Explanation:

Manufacturing costs are the costs which are involved in the production of the goods. It excludes the direct materials and the direct labor as these factors are not only factors of production but used for other work in the organisation.

The indirect materials used are also included in this overhead which cannot be traced easily. Some of the manufacturing costs are maintenance, repairs on production, heat light, property tax, depreciation and insurance on manufacturing facilities. These costs are also called as factory overhead and factory burden.