KPR Contracting Co. manufacturers and sells tools and equipment for general contractors. For
their main product, the Company incurs approximately the following costs:
• $5.75 in Direct Materials
• $10.90 in Direct Labor
• $2.27 in Electricity
• $2.48 in Rent Expense for their Retail Store
a) Which of the above costs would be including in Manufacturing Overhead? Why?
b) What should be the balance in the Manufacturing Overhead Account as of year-end? Why?
