cost accounting - overheads

1. What is overhead in cost accounting?

• Direct materials cost

• Direct labor cost

• Indirect cost that cannot be directly traced to a product

• Selling price of a product

2. Which of the following is an example of factory overhead?

• Direct wages of workers

• Raw materials

• Depreciation of factory machinery

• Sales commission

3. Which of the following is not classified as overhead?

• Rent of factory building

• Salaries of factory supervisors

• Direct labor wages

• Factory power and fuel

4. What is the main purpose of overhead absorption in cost accounting?

• To calculate selling price

• To allocate indirect costs to products

• To calculate direct labor cost

• To determine market demand

5. Which of the following is an indirect material cost?

• Wood used in furniture

• Nails and glue used in furniture production

• Payment to workers

• Direct labor for assembling furniture

6. Which basis is commonly used to absorb overhead in a manufacturing company?

• Direct labor hours

• Units sold

• Market price

• Company’s profit margin

7. What type of overhead varies directly with production volume?

• Fixed overhead

• Variable overhead

• Semi-variable overhead

• Administrative overhead

8. Which of the following is considered a fixed overhead?

• Factory power consumption

• Indirect materials

• Rent of factory building

• Piece-rate labor

9. Which of the following is not a component of manufacturing overhead?

• Indirect labor

• Factory rent

• Factory insurance

• Direct raw materials

10. What is the main difference between direct costs and overhead costs?

• Direct costs are incurred outside the factory, overhead costs inside

• Direct costs can be traced to a product; overhead costs cannot

• Overhead costs are always variable, direct costs are always fixed

• Direct costs include factory rent, overhead costs include wages