Which of the following is an example of an overhead in a company?
A) Cost of maintaining a vending machine in the break room
B) Cost of instruments needed for production
C) Basic salary paid to every employee
D) Bonus amounts paid to the higher-level management

Question

Quizplus · Accepted Answer

Overheads are expenses that do not directly contribute to the production or sale of a product or service and are incurred even when there is no output. Maintaining a vending machine in the break room is an example of such an expense. Option B is incorrect as the cost of instruments needed for production is a direct expense that contributes to the manufacturing process. Option C is incorrect as basic salary paid to every employee is a direct expense that is directly tied to the production process. Option D is incorrect as bonuses paid to higher-level management may be classified as a direct expense as it may be based on the achievement of production-related targets.

Which of the Following Is an Example of an Overhead