The following information relates to Chesapeake Inc.: Advertising Costs $10,270
ID: 2453048 • Letter: T
Question
The following information relates to Chesapeake Inc.: Advertising Costs $10,270 Sales Salary 4,500 Sales Revenue 450,000 President's Salary 40,300 Office Rent 61,100 Manufacturing Equipment Depreciation 2,080 Indirect Materials 9,360 Indirect Labor 11,700 Factory Repair and Maintenance 910 Direct Materials 28,080 Direct Labor 35,100 Delivery Vehicle Depreciation 1,027 Administrative Salaries 24,700 How much was Chesapeake Inc’s manufacturing overhead? A) $21,060 B) $21,970 C) $24,050 D) $141,897
Explanation / Answer
Manufacturing overheads are the costs that are incurred to manufacture a product. These are in addition to the direct material and direct labor.
Manufacturing overhead costs include indirect costs other than selling and administrative expenses. Factory expenses are also included in the manufacturing overhead.
Hence the manufacturing overhead of Chesapeake Inc. is the total of the following:
Manufacturing Equipment Depreciation - $2,080
Indirect Materials - $ 9,360
Indirect Labor - $11,700
Factory Repair and Maintenance - $ 910
Total is $ 24,050.
Hence the answer is C) $24,050
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