Question

57. A manufacturing firm is very busy and is working overtime. The amount of overtime premium contained
in direct wages would normally be classed as:
(A) Part of prime cost
(B) Factory overheads
(C) Direct labour cost
(D) Administrative overheads
cent​

Answer 1

It will be classed as factory overhead.

• If an assembling firm that is occupied and is staying at work longer than required, then the measure of extra time premium contained in direct wages is classified as factory overhead.
• These overheads are the expenses caused during the assembling cycle, excluding the expenses of direct work and direct materials.
• The overheads are ordinarily accumulated into cost pools and distributed to units created during the time frame. For example the rent of the building or the property tax and insurance.