Question

Manufacturing overhead is best described as:

All period costs associated with manufacturing operations.

All manufacturing costs other than direct materials and direct labor.

All operating expenses other than selling expenses and general and administrative expenses.

Indirect materials and indirect labor.

Answer 1

The correct option is B i.e Manufacturing overhead is best described as: All manufacturing costs other than direct materials and direct labor.

Manufacturing overheads which is also known as factory overhead refers to indirect factory related cost that takes place when goods are manufactured. It is an indirect cost incurred during the production process. For e.g. insurance, rent, rates, heat, water, electricity, depreciation of factory plant and machinery.

Direct materials and direct labor are usually considered as costs that directly related to production, manufacturing overhead is (by default) all of the indirect costs of a factory.