Production overheads are charged as an expense in the income statement as part of costs of sales

Question

Quizplus · Accepted Answer

Production overheads are indirect costs that are incurred in the manufacturing process, such as rent, utilities, depreciation, and maintenance. They are included in the cost of production and charged to the finished goods inventory. When the inventory is sold, the production overheads are then transferred to the cost of sales as an expense in the income statement. Therefore, Option A is correct.

Production Overheads Are Charged as an Expense in the Income