Commercial Applications
Answer
Fuel
Reason — Manufacturing (factory) overheads are indirect costs incurred in the production process, which include indirect materials (grease, oil), indirect labour (storekeeper's salary) and indirect expenses such as power and fuel. Fuel used in operating machinery in the factory is a typical example. Office rent and stationery are office and administrative overheads, while advertising is a selling and distribution overhead.
Related Questions
A firm has to pay a fixed rent of ₹500 for the post-paid mobile bill and further pay extra charges for the calls made in a month. Identify the type of cost mentioned here.
- Fixed cost
- Variable cost
- Semi-Fixed cost
- Unit cost
Identify which of the following is NOT a direct cost in a cotton textile unit.
- Rent of the factory where production is being carried out.
- Expense incurred on advertisement to promote the sale of the finished product.
- Colours used for dyeing the cotton fabric.
- Wages paid to the operators of sewing and spinning machines.
"Abnormal costs are not recorded as part of production cost." Justify for or against.
Give two differences between direct labour cost and indirect labour cost.