[amp_mcq option1=”overhead” option2=”factory cost” option3=”cost of sales” option4=”cost of production” correct=”option1″]
The correct answer is: A. overhead
Overhead is an expense that is not directly related to the production of a good or service. It includes costs such as rent, utilities, insurance, and salaries for administrative staff.
Factory cost is the total cost of producing a good or service, including direct labor, direct materials, and overhead.
Cost of sales is the total cost of goods sold during a period, including the cost of goods manufactured and the cost of goods purchased.
Cost of production is the total cost of producing a good or service, including direct labor, direct materials, overhead, and any other costs directly related to production.
Here is a table that summarizes the differences between the four options:
| Option | Definition |
|—|—|
| Overhead | An expense that is not directly related to the production of a good or service. |
| Factory cost | The total cost of producing a good or service, including direct labor, direct materials, and overhead. |
| Cost of sales | The total cost of goods sold during a period, including the cost of goods manufactured and the cost of goods purchased. |
| Cost of production | The total cost of producing a good or service, including direct labor, direct materials, overhead, and any other costs directly related to production. |