Multiple Choice
Which of the following is an element of inventory holding costs?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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Which of the following is NOT considered part of manufacturing overhead when producing a computer?
A
Factory utilities expense
B
Depreciation on factory equipment
C
Direct labor wages for assembly line workers
D
Factory supervisor's salary
Verified step by step guidance1
Step 1: Understand the concept of manufacturing overhead. Manufacturing overhead includes all indirect costs associated with the production process, such as factory utilities, depreciation on factory equipment, and salaries of factory supervisors. These costs are not directly traceable to a specific product.
Step 2: Differentiate between direct and indirect costs. Direct costs, such as direct labor wages for assembly line workers, are directly traceable to the production of a specific product and are not considered part of manufacturing overhead.
Step 3: Analyze each option provided in the question. Factory utilities expense, depreciation on factory equipment, and factory supervisor's salary are all indirect costs and therefore part of manufacturing overhead.
Step 4: Identify the option that does not fit the definition of manufacturing overhead. Direct labor wages for assembly line workers are direct costs and are excluded from manufacturing overhead.
Step 5: Conclude that the correct answer is the option that represents a direct cost, which is 'Direct labor wages for assembly line workers.'
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