Which of the following is considered an element of manufacturing overhead?

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BlackTom AI · Accepted Answer

The question asks which item is considered an element of manufacturing overhead among the given options.
Option 1: Direct materials used in production. This is not overhead; it is a direct product cost charged directly to inventory and the cost of goods sold. Materials are inventoried as part of direct materials and traced to the specific product, so they fall outside the overhead category.
Option 2: Indirect factory labor. This is a classic example of manufacturing overhead. It includes wages paid to workers who support the production process but do not directly trace to a specific product (e.g., maintenance staff, quality control). These costs are necessary for production but cannot be allocated to a single unit, hence classified as overhead.
Option 3: Direct labor wages. Direct labor costs are directly tied to making specific products; they are traced to the finished goods and are considered a direct product cost, not overhead.
Option 4: Freight-in on raw materials purchased. Freight-in costs are part of the cost to acquire materials. Depending on accounting policy, they are often included in the cost of direct materials rather than overhead, because they are necessary to bring materials into a condition to use in production and can be traced to the materials rather than to overhead activities. In many classifications, this is not overhead.
Overall, only Option 2 (Indirect factory labor) clearly fits the definition of manufacturing overhead in standard cost accounting, while the others are typically treated as direct material or direct labor costs, or as part of the materials cost rather than overhead.

2601-ACC1064 FUNDAMENTALS OF ACCOUNTING Pop Quiz 1 2601-ACC1064 FUNDAMENTALS OF ACCOUNTING Pop Quiz 1

Which of the following is considered an element of manufacturing overhead?

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