Question

Nixon Company has been experiencing significant turnover lately. The new hire needs your help in calculating total factory overhead costs for the month. Sales commissions Direct labor Indirect materials Factory manager salaries Factory supplies Indirect labor Depreciation-office equipment Direct materials Corporate office salaries Depreciation-factory equipment $11,800 40,600 16,200 8,200 10,000 7,300 6,000 41,500 43,500 8,500 Multiple Choice $132,300 $50.200 $61300

Answer 1

Answer)

Calculation of factory overhead cost for the month

Factory overhead cost includes expenses that relate to production of finished goods. However, since costs are indirect costs and cannot be directly traced to individual units produced.

	Amount
Indirect materials	$       16,200
Factory manager salaries	$         8,200
Factory supplies	$       10,000
Indirect labor	$         7,300
Depreciation - factory equipment	$         8,500
Total factory overheads	$       50,200

Therefore the amount of factory overheads is $ 50,200.

Notes:

· Sales commission is not a factory overhead as it is not related to production. It is a part of selling overheads.

· Direct labor is not a part of factory overheads as it is a part of prime cost.

· Indirect Materials, Factory Manager Salaries, Factory Supplies, Indirect Labor, depreciation- factory equipment are a part of factory overheads as these are indirect costs that are related to production of goods.

· Depreciation – Office equipment is not a factory overhead as it is not related to production. It is a part of administration overheads.

· Direct material is not a part of factory overheads as it is a part of prime cost.

· Corporate office salary is not a factory overhead as it is not related to production. It is a part of administration overheads.