Question

) Displayed below are the monthly manufacturing cost data for ABC Company related to its wooden furniture products:

a)     Factory Security          $25,000

b)    Factory Rent                 $12,000

c)     Factory Utilities              $5,000

d)    Wood                             $210,000

e)     Direct Labour           $150,000

Calculate the total manufacturing overhead.

Answer 1

1 ABC Factory utilities $5,000 , it is a manufacturing overhead item. Because it is irelated to manufacturing of the product. Factory utilities is an indirect expenses of manufacturing.

2 Factory rent $12,000 is the cost incurred for manufacturing. It is indirect manufacturing cost.

3 ABC company Factory security $25,000 is a indirect manufacturing cost. Factory security cost $25,000 is the cost incurred to protect the factory.

4 ABC company is a wooden furniture product. Wood is a direct material required for furniture products. So wood $210,000 is a direct material. Not a manufacturing overhead item.

5 Direct labour $150,000 is a direct cost, it is not a manufacturing overhead cost. Overhead include only indirect items.

Calculation of manufacturing overhead

Particulars	$
Factory rent	12,000
Factory utilities	5,000
Factory security	25,000
Total manufacturing overhead cost	$42,000

$42,000 is the total manufacturing overhead cost of ABC company.

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