The costs of materials and labor that do not enter directly into the finished product are classified as factory overhead.

Question

Quizplus · Accepted Answer

Factory overhead refers to the indirect costs incurred during the production process, such as rent, utilities, depreciation, and wages of maintenance and supervisory staff. These costs are not directly attributable to a specific unit of production but are necessary for the overall operation of the factory.

The Costs of Materials and Labor That Do Not Enter