Which one of the following is not an example of variable fac

Which one of the following is not an example of variable factory overhead?

Fuel and power

Insurance

Overtime premium

Supplies

Solution

Answer:

Option B i.e. Insurance is Correct.

Variable Factory overhead are those manufacturing costs which change with change in units produced i.e. increases with increases in unit produced and decreases with decreases in units produced and which are relevant for production of product.

Fuel and Power, overtime premium, Supplies are Variable factory overhead, but Insurance is a fixed expense as it remains constant despite changes in plant volumes.