Question

Use the following data to compute total factory overhead costs for the month: Sales commissions……………………….. $10,800 Direct labor 39,600 Indirect materials…………………………. 15,200 Factory manager salaries 7,200 Factory supplies 9,000 Indirect labor 6,300 Depreciation–office equipment………… 5,000 Direct materials…………………………… 40,500 Corporate office salaries 42,500 Depreciation–factory equipment 7,500

Answer 1

Answer: Total factory overhead is 45200.

Explanation: According to cost accounting there are 3 elements of cost:

Direct materials, direct labor and factory overheads. All costs related to production or factory that are not directly incorporated into the product are considered factory overheads.

According to this, we calculate:

Indirect materials = 15200

Factory manager salaries = 7200

Factory supplies = 9000

Indirect labor = 6300

Depreciation - factory equipment = 7500

15200 + 7200 + 9000 + 6300 + 7500 = 45200.