Question

Which of the following cost is also known as overhead cost or on cost:

a. Cost of direct labour

b. Cost of indirect labour

c. Direct expenses

d. Indirect expenses

Answer 1

The correct answer is OPTION D: Indirect expenses.

• Indirect expense cost is also known as overhead cost or on cost.
• Indirect costs are costs that are not directly tied to a cost item, such as a project, facility, function, or product. Indirect costs can be either fixed or variable.
• Indirect expenditures include things like administration, staffing, and security. These are costs that aren't directly associated with the manufacturing process.
• Some indirect costs may be accounted for via overhead. Certain overhead costs, on the other hand, are direct costs that may be linked to a specific project.
• Indirect costs are separated into two groups.

1. Fixed indirect expenses are a type of indirect expense that includes activities or costs that are fixed for a certain project or company, such as labor transportation to the job site, temporary road construction, and so on.
2. Recurring indirect expenses are the third category of indirect cost, and they involve acts that a company does regularly, such as keeping records or paying employees.