The R&R Company's production costs for August are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production equipment, $800; heat, lights and power, $1,000; and insurance on plant and equipment, $200. R&R Company's factory overhead incurred for August is:

A-$2,000.
B-$6,500.
C-$8,500.
D-$21,500.
E-$36,500.

The factory's overhead cost is $8,500

Explanation:

First, you have to know what an overhead cost is; An overhead cost is the cost incurred in production that is not direct labor, direct material cost or all direct expenses on production. In this case, let us identify all the direct costs involved in production;

indirect labor = $6,500

property taxes on production = $800

heat, light and power = $1,000

insurance on plant equipment = $200

Therefore, total overhead cost = 6,500 + 800 + 1,000 + 200 =  $8,500.

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