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Factory overheads are incurred only and only due to production of the goods. That is why the factory overhead cost is applied to production.

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12y ago

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What is purpose of factory overhead applied and how this information can use by the cost accountant in minimum the cost of the product?

Factory overhead is what it costs to run the factory. The cost accountant can look at the cost of overhead to find ways to minimize it, resulting in the cost of the product being lower.


Is overhead applied after the period?

Overhead is applied at start of production to calculate the cost of goods manufactured and to determine the total cost and profit as well.


Is factory heating costs classified as a product cost or period cost?

Factory heating cost is overhead cost and part of product cost as if there is no production there is no factory heating requires.


Why you charge production at pre determined factory overhead rate?

The predetermined factory overhead rate is the cost associated with all products produced by the company. This helps the company easily assign cost.


What is an overhead?

An overhead is a cost that is not directly related to the production of a specific good or service but that is indirectly related to the production of several goods or services. For example, the cost of maintaining an office or factory - lighting, heating etc.


Differentiate prime cost and production overhead?

Prime cost includes direct material and direct labor without which no goods can be manufactured while production overhead is that other cost which is not directly identifiable with product but which is required to run factory operations.


What is the Difference between actual overhead costs and overhead costs applied?

The Actual overhead is calculated throughout the Production cycle for indirect cost associated to the production and the overhead costs applied is based on the fixed rate assigned against the machine or labour hours to be calculated for the difference b/w two are called under or over applied.


Are cafeteria costs for the factory a period cost?

No. They are a product cost/factory overhead cost


Is salary of factory manager a period cost?

Salary of factory manager is Manufacturing overhead. and Manufacturing overhead is Product costs. So, It's not period cost.


Is factory manager's salary part of factory overhead cost?

yes


Is depreciation of factory plant and equipment a factory overhead cost?

YES


Is Factory Overhead on income statement?

yes factory overhead is part of income statement and shown in cost of goods sold statement as a product cost.