Question

Asteroid Industries accumulated the following cost information for the year:

Direct materials	$	15,300
Indirect materials		3,300
Indirect labor		7,800
Factory depreciation		12,100
Direct labor		36,300

Using the above information, total factory overhead costs equal:

Answer 1

Solution :

The formula for calculating the factory overhead is

= Indirect materials + Indirect labor + Factory depreciation

As per the information given in the question we have

Indirect materials = $ 3,300 ; Indirect labor = $ 7,800 ; Factory depreciation = $ 12,100 ;

Applying the available information in the formula we have factory overhead costs as

= $ 3,300 + $ 7,800 + $ 12,100

= $ 23,200

Thus the total factory overhead costs = $ 23,200

Note : Direct materials and Direct labour are included as a part of prime cost and are not considered as factory overheads in costing.