Question

Which of the following items are properly classified as part of factory overhead for Ford Motor Company (F), a maker of heavy automobiles and trucks? Item Part of Factory Overhead: Yes/No a. Air conditioner units for installation in vehicles b. Consultant fees for a study of production line efficiency c. Dealership sales incentives d. Depreciation on headquarters building in Dearborn, Michigan e. Depreciation on mechanical robots used on the assembly line f. Leather to be used on vehicles that have leather interiors g. Machine lubricant used to maintain the assembly line at the Louisville, Kentucky, assembly plant h. Plant manager’s salary at Buffalo, New York, stamping plant, which manufactures auto and truck subassemblies i. Property taxes on the Dearborn, Michigan, headquarters building j. Vice president of human resource’s salary

Answer 1

Answer:

Ford Motor Company

Classification as Factory Overhead:

Item   Part of Factory Overhead:

a.        No

b.        Yes

c.        No

d.        No

e.        Yes

f.         No

g.        Yes

h.        Yes

i.          No

j.          No

Explanation:

Factory overhead, which applies mainly to indirect materials, labor, and other costs, are the total cost involved in operating all production facilities of Ford Motor Company.  Usually, these costs cannot be traced directly to the company's products.  Note that other expenses (selling and administrative costs) incurred outside the factory are not factory overhead costs.