Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called:

Question

Samir Petty

Business

12 June, 11:04

Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called:

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Vance Mendoza · Answer 1

These costs are called overhead cost.

Explanation:

Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called overhead cost. These costs can not be associated with specific product so they are allocated to product cost based on estimation.

These cost include accounting fees, advertising, depreciation expense insurance, interest, legal fees, labor burden, rent, repairs, supplies, taxes, telephone bills, travel expenditures, and utilities

These costs are futher divided in two categories that is variable overhead cost and fixed overhead cost.