Manufacturing Overhead (Quiz)

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If you have difficulty answering the following questions, learn more about this topic by reading our Manufacturing Overhead (Explanation).

  1. 1.

    Selling, general and administrative costs are part of manufacturing overhead.

    True
    Wrong.
    SG&A costs and interest expense are reported as expenses on the income statement in the accounting period in which they are incurred. They could be viewed as administrative overhead, but not manufacturing overhead.
    False
    Right!
    These expenses are nonmanufacturing expenses.
  2. 2. Factory overhead and burden are terms used as alternatives for the term
    __________
    manufacturing
    overhead.
  3. 3.

    Which of the following are part of manufacturing overhead?

    Direct Labor
    Wrong.
    Direct labor is a specific, separate component of the manufacturing cost of a product.
    Indirect Labor
    Right!
    Indirect manufacturing labor is part of manufacturing overhead. Other examples of manufacturing overhead include equipment maintenance, factory supplies, and depreciation on the factory building.
    Office Depreciation
    Wrong.
    Office depreciation is part of SG&A expenses and is not included in the manufacturing overhead. Office depreciation could be viewed as an administrative overhead.
  4. 4. The factory maintenance department and the factory administration department are examples of
    __________
    service or support
    departments.
  5. 5.

    To be in compliance with generally accepted accounting principles, selling and administrative expenses and interest expense should be allocated to the cost of products manufactured in order to properly value inventories on a manufacturer's balance sheet.

    True
    Wrong.
    SG&A and interest expenses are not allocated to inventories for financial reporting under generally accepted accounting principles. (Management might allocate these expenses internally to assist in pricing and other marketing decisions. However, they are not allocated for inventory valuation purposes.)
    False
    Right!
    SG&A and interest expenses are not allocated to inventories for financial reporting under generally accepted accounting principles. (Management might allocate these expenses internally to assist in pricing and other marketing decisions. However, they are not allocated for inventory valuation purposes.)
  6. 6.

    Manufacturing overhead must be assigned to both work-in-process inventory and finished goods inventory for external financial reporting purposes.

    True
    Right!
    False
    Wrong.
  7. 7.

    Only direct manufacturing costs are assigned to inventories and cost of goods sold.

    True
    Wrong.
    False
    Right!
  8. 8.

    Commissions paid to sell products are reported as part of the cost of goods sold.

    True
    Wrong.
    False
    Right!
  9. 9.

    Traditional costing is more likely to be associated with allocating manufacturing overhead on the basis of

    Activities
    Wrong.
    Machine Hours
    Right!
  10. 10.

    The depreciation on the machines used on the manufacturing line is considered to be __  _______________ manufacturing cost.

    A Direct
    Wrong.
    An Indirect
    Right!
  11. 11.

    In general, manufacturing overhead has increased as a percentage of product costs during the past 80 years.

    True
    Right!
    False
    Wrong.
  12. 12.

    The use of a plant-wide rate will be more equitable than the use of departmental rates for allocating manufacturing overhead.

    True
    Wrong.
    False
    Right!
  13. 13.

    Manufacturing overhead costs are also known as indirect manufacturing costs.

    True
    Right!
    False
    Wrong.
  14. 14.

    Using only machine hours for assigning manufacturing overhead will likely result in too ___________ costs for low volume products.

    Little
    Right!
    Much
    Wrong.
  15. 15.

    The salary of the president of a manufacturer is part of the manufacturing overhead costs.

    True
    Wrong.
    False
    Right!
    The salary of the president is part of selling, general and administrative expenses.

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