Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called:
A) Administrative expenses.
B) Nonmanufacturing costs.
C) Sunk costs.
D) Factory overhead.
E) Preproduction costs.

Question

Quizplus · Accepted Answer

Factory overhead costs, also known as indirect manufacturing costs, are costs incurred in the manufacturing process that are not directly associated with specific units or batches of production. These costs are typically fixed costs, such as rent, utilities, and depreciation on factory equipment, and are spread out over the entire production process using predetermined overhead rates.

Costs That Are Incurred as Part of the Manufacturing Process