Question

Comet Company accumulated the following account information for the year: Beginning raw materials inventory $ 5,600 Indirect materials cost 1,600 Indirect labor cost 4,600 Maintenance of factory equipment 2,400 Direct labor cost 6,600 Using the above information, total factory overhead costs would be:

Answer 1

Overhead is any cost that cannot be traced back to the physical product (i.e. not direct materials and direct labor). Therefore, we cannot use the direct labor and beginning raw materials in the calculation. The total factory overhead costs are $8,600.
The calculation is as follows:
Indirect materials: $1,600
Add: Indirect labor costs $4,600
Maintenance of factory equipment: $2,400
Total factory overhead costs: $8,600

Source: Finance MBA student :)