During self-construction of an asset by Richardson Company, the following were among the costs incurred: What amount of overhead should be included in the cost of the self-constructed asset?

Question

During self-construction of an asset by Richardson Company, the following were among the costs incurred:  What amount of overhead should be included in the cost of the self-constructed asset?

Quizplus · Accepted Answer

Overhead costs should be included in the cost of self-constructed assets. Based on the costs incurred, the total overhead can be calculated as follows: 
Indirect materials = $5,000
Repairs and maintenance = $10,000
Property taxes = $5,000
Depreciation on equipment = $20,000
Insurance on plant and equipment = $40,000
Total overhead = $80,000 
Therefore, choice D is the correct answer.

During Self-Construction of an Asset by Richardson Company, the Following