QUESTION 1 Assigning manufacturing overhead to a specific job involves some diff

Question

QUESTION 1 Assigning manufacturing overhead to a specific job involves some difficulties. All of the following are examples of such a difficulty except O Manufacturing overhead is an indirect cost, and is either impossible or difficult to trace to a particular product or job. O Manufacturing overhead consists of many different types of costs, including both variable overhead, that varies in proportion to changes in level of production, and fixed overhead that remains constant as the level of production fluctuates ? Fixed costs in manufacturing overhead remain relatively constant from one oeriod to the next even though the units produced fluctuate, causing the average cost per unit to vary from one period to the next. Manufacturing overhead s a direct cost and consists of both variable and fixed costs

Explanation / Answer

Manufacturing overhead is a indirect cost of the any company because the it includes all the cost of manufacturing related except to Direct material and Direct Labour. So only Direct MAterial and direct labour is only the direct cost of any product. Indirect cost for any manufacturing overhead is includes Depreciation, Factory Insurance, Rent of Factory, Salary and wages of factory employee and others.

Manufacturing overhead have the fixed cost also and variable cost. Factory rent of the comany is fixed manufacturing overhead and Electricity is variable manufacturing overhead. So it means manufacturing overhead will includes Variable and fixed cost also.

So As per the above , Option 1,2 & 3 are the correct and showing the correct details.

So, answer = Option 4 = Manufacturing overhead is a direct cost and consists of both variable and fixed costs.

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