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Likurg_2 [28]
3 years ago
5

Abburi Company's manufacturing overhead is 40% of its total conversion costs. If direct labor is $105,000 and if direct material

s are $21,000, the manufacturing overhead is:
Business
1 answer:
ivanzaharov [21]3 years ago
5 0
Manufacturing overhead= $57,600
Explanation:
To calculate the Conversion costs, we need to use the following formula:
Conversion costs= direct labor + manufacturing overhead
Now, if direct labor is 60% of conversion costs, then:
Conversion costs= direct labor / (1 - 0.4)
Conversion costs= 86,400 / 0.6
Conversion costs= $144,000
Finally, we determine the manufacturing overhead:
Manufacturing overhead= 144,000 - 86,400
Manufacturing overhead= $57,600

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