Commercial Applications
An example of a production overhead would be ……………
- Material
- Rent
- Labour cost
- Supervisory cost
Answer
Supervisory cost
Reason — Production overhead consists of indirect materials, indirect labour and indirect expenses related to the production process. Supervisory cost (salary of foremen, supervisors) is indirect labour and forms part of factory/production overhead. Material and labour cost (when direct) are part of prime cost, not overhead. Plain "rent" is generic — without specifying it as factory rent it cannot be classified as production overhead.
Related Questions
Which of the following is overhead cost?
- Amount spent on raw material
- Salary of the finishing cost centre supervisor
- Wages paid to labour
- None of these
Variable cost per unit increases when ……………
- Volume of production decreases
- Volume of production increases
- Cost of raw material decreases
- Tax decreases
A cost that is easily traceable to a cost object is known as ……………
- Direct cost
- Indirect cost
- Variable cost
- Fixed cost
What is a defining feature of semi-variable (mixed) costs?
(1) They remain constant across various activity levels.
(2) They solely consist of variable components.
(3) They only apply to service industries.
(4) They include both fixed and variable elements.
- 1 & 2
- Only 4
- Only 1
- 3 & 4