Which of the following is another name for manufacturing overhead?

• A. Factory overhead
• B. Selling expenses
• C. Direct materials
• D. Prime costs

Answer: (A)

Verified step by step guidance

1. Understand the concept of manufacturing overhead: Manufacturing overhead refers to all the indirect costs associated with the production process that cannot be directly traced to specific products. These include costs like factory utilities, depreciation on manufacturing equipment, and salaries of factory supervisors.
2. Review the provided options: The options are Factory overhead, Selling expenses, Direct materials, and Prime costs.
3. Eliminate incorrect options: Selling expenses are costs related to marketing and selling products, not production. Direct materials are raw materials directly used in manufacturing products, and Prime costs are the sum of direct materials and direct labor, which are direct costs rather than overhead.
4. Identify the correct term: Factory overhead is another name for manufacturing overhead because it encompasses all indirect costs incurred within the factory during production.
5. Confirm understanding: Manufacturing overhead and factory overhead are interchangeable terms used to describe indirect production costs, ensuring clarity in financial accounting terminology.