Question

Haight Company incurred direct materials costs of $1,500,000 during the year. Manu-facturing overhead applied was $270,000 and is applied at the rate of 60% of direct labor costs. Haight Companys total manufacturing costs for the year wasa. $2,220,000.b. $1,932,000.c. $1,770,000.d. $2,832,000.

Answer 1

Answer:

A. $2,220,000

Explanation:

We know,

Manufacturing cost = Direct material + Direct labor + Manufacturing overhead

Given,

Direct Material = $1,500,000

Manufacturing overhead = $270,000

To find direct labor, we have to use manufacturing overhead,

Manufacturing overhead = Direct labor x 60%

or, $270,000 = Direct labor x 60%

Direct labor = $\frac{270,000}{.60}$

Direct labor = $450,000

Therefore, total manufacturing costs = $1,500,000 + $450,000 + $270,000

Total manufacturing costs = $2,220,000