Question

During the month of April, direct labor cost totaled $15,000 and direct labor cost was 40% of prime cost. If total manufacturing costs during April were $77,000, the manufacturing overhead was:

Answer 1

Answer:

Manufacturing overhead= $39,500

Explanation:

Giving the following information:

Direct labor= $15,000

Direct labor cost was 40% of prime cost.

Total manufacturing costs= $77,000

First, we need to calculate the prime cost:

Prime cost= direct material + direct labor

Prime cost= 15,000/0.4= 37,500

Now, we can determine the manufacturing overhead:

Manufacturing overhead= total manufacturing costs - prime costs

Manufacturing overhead= 77,000 - 37,500

Manufacturing overhead= $39,500