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Which of the following is an overhead cost in the production of an automobile?
A. The cost of small tools used in mounting tires on each automobile.
B. The cost of the tires on each automobile.
C. The cost of the laborers who place tires on each automobile.
D. The delivery costs for the tires on each automobile.
Hi
Overhead costs are the costs that are not related to Direct Material or Direct Labor costs.
Answer B) Cost of the tires - Direct Material Cost
Answer C) Cost of Laborers - Direct Labor Cost
Answer D) Delivery Costs for Tires - Should be included under the Direct Material Cost in order to insure proper and accurate cost per unit.
Correct Answer is Answer A) The cost of small tools.
Would appreciate the feedback.
Thanks
Abed
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