Multiple Choice
Which of the following statements about a promissory note is true?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is NOT classified as manufacturing overhead?
A
Depreciation on factory equipment
B
Factory supervisor's salary
C
Factory utilities
D
Direct materials used in production
Verified step by step guidance1
Understand the concept of manufacturing overhead: Manufacturing overhead includes all indirect costs associated with the production process, excluding direct materials and direct labor. Examples include factory utilities, depreciation on factory equipment, and factory supervisor's salary.
Identify the items listed in the problem: Depreciation on factory equipment, factory supervisor's salary, factory utilities, and direct materials used in production.
Classify each item: Depreciation on factory equipment, factory supervisor's salary, and factory utilities are indirect costs and are part of manufacturing overhead. Direct materials used in production are direct costs and are not classified as manufacturing overhead.
Recognize the distinction between direct costs and indirect costs: Direct costs are directly traceable to the production of goods (e.g., raw materials), while indirect costs are not directly traceable and are categorized as manufacturing overhead.
Conclude that the correct answer is direct materials used in production, as it is a direct cost and not part of manufacturing overhead.
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