Factory Overhead Cost : Factory overhead cost is the cost other than the direct material cost, and the direct labor cost which is not directly involved in the production of converting the raw materials to the finished products. If the direct material cost or direct labor cost does not constitute the major portion of the total cost of the finished product, then it may be classified as the factory overhead cost. For example: Cost of repairing, and maintaining factory equipment. To indicate: Whether the given items are properly classified as part of factory overhead cost for Company F.

Question

Classifying Costs as Factory Overhead Which of the following items are properly classified as part of factory overhead for Ford Motor Company, a maker of heavy automobiles and trucks? Item Part of Factory Overhead: Yes/No a. Plant manager’s salary at Buffalo, New York, stamping plant, which manufactures auto and truck subassemblies b. Depreciation on Flat Rock, Michigan, assembly plant c. Dividends paid to shareholders d. Machine lubricant used to maintain the assembly line at the Louisville, Kentucky, assembly plant e. Leather to be used on vehicles that have leather interiors f. Depreciation on mechanical robots used on the assembly line g. Consultant fees for a study of production line efficiency h. Dealership sales incentives i. Vice president of human resources’s salary j. Property taxes on the Dearborn, Michigan, headquarters building

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Chapter 18, Problem 18.3EX

To determine

Factory Overhead Cost:

Factory overhead cost is the cost other than the direct material cost, and the direct labor cost which is not directly involved in the production of converting the raw materials to the finished products. If the direct material cost or direct labor cost does not constitute the major portion of the total cost of the finished product, then it may be classified as the factory overhead cost. For example: Cost of repairing, and maintaining factory equipment.

To indicate: Whether the given items are properly classified as part of factory overhead cost for Company F.

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Classifying Costs as Factory Overhead Which of the following items are properly classified as part of factory overhead for Ford Motor Company, a maker of heavy automobiles and trucks? Item Part of Factory Overhead: Yes/No a. Plant manager’s salary at Buffalo, New York, stamping plant, which manufactures auto and truck subassemblies b. Depreciation on Flat Rock, Michigan, assembly plant c. Dividends paid to shareholders d. Machine lubricant used to maintain the assembly line at the Louisville, Kentucky, assembly plant e. Leather to be used on vehicles that have leather interiors f. Depreciation on mechanical robots used on the assembly line g. Consultant fees for a study of production line efficiency h. Dealership sales incentives i. Vice president of human resources’s salary j. Property taxes on the Dearborn, Michigan, headquarters building

Which of the following items are properly classified as part of factory overhead for Ford Motor Copmany, a maker of heavy automobiles and trucks? A. Plant manager’s salary at Buffalo, New York, stamping plant, which manufactures auto and truck subassemblies B. Depreciation on Flat Rock, Michigan, assembly plant C. Dividends paid to shareholders D. Machine lubricant used to maintain the assembly line at the Louisville, Kentucky, assembly plant E. Leather to be used on vehicles that have leather interiors F. Depreciation on mechanical robots used on the assembly line G. Consultant fees for a study of production line efficiency H. Dealership sales incentives I. Vice president of human resources’s salary J. Property taxes on the Dearborn, Michigan, headquarters building

Which of the following items are properly classified as part of factory overhead for Ford Motor Company, a maker of heavy automobiles and trucks?a. Plant manager’s salary at Buffalo, New York, stamping plant, which manufactures auto and truck subassembliesb. Depreciation on Flat Rock, Michigan, assembly plantc. Dividends paid to shareholdersd. Machine lubricant used to maintain the assembly line at the Louisville, Kentucky, assembly plante. Leather to be used on vehicles that have leather interiorsf. Depreciation on mechanical robots used on the assembly lineg. Consultant fees for a study of production line efficiencyh. Dealership sales incentivesi. Vice president of human resources’ salaryj. Property taxes on the Detriot, Michigan, headquarters building