[amp_mcq option1=”factory overhead” option2=”selling overhead” option3=”distribution overhead” option4=”administration overhead” correct=”option1″]
The correct answer is: A. factory overhead.
Factory overhead is a type of indirect cost that is incurred in the manufacturing process but cannot be directly attributed to the cost of a specific product. Depreciation of plant and machinery is an example of a factory overhead cost. Other examples of factory overhead costs include indirect labor, indirect materials, and factory rent.
Selling overhead is a type of indirect cost that is incurred in the selling and marketing of a product. Distribution overhead is a type of indirect cost that is incurred in the distribution of a product. Administration overhead is a type of indirect cost that is incurred in the general administration of a business.
Factory overhead is an important cost to consider when determining the cost of a product. The cost of factory overhead is typically included in the cost of goods sold. The cost of goods sold is a key figure in determining a company’s gross profit.