Which of the Following Is an Example of a Factory

question 193

Multiple Choice

Which of the following is an example of a factory overhead cost?

• A) repair and maintenance cost on an administrative building
• B) factory heating and lighting cost
• C) insurance premiums on salespersons' automobiles
• D) president's salary

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Definitions:

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process.

Allocation Base

An allocation base is a measure or quantity (like direct labor hours or machine hours) that is used to assign costs in an equitable manner.

Overhead Costs

Expenses associated with running a business that cannot be directly attributed to a specific product or service, such as rent, utilities, and administrative expenses.

Plantwide Overhead Rate

A single overhead rate applied to all production activities, calculated by dividing the total factory overhead by an allocation base, such as direct labor hours.