Question

The ending inventory of finished goods has a total cost of $9,500 and consists of 600 units. If the overhead applied to these goods is $3,600, and the overhead rate is 80% of direct labor, how much direct materials cost was incurred in producing these units?

Answer 1

Direct Materials = 1,400

Step-by-step explanation:

Using the total cost formula we will solve for materials

total cost = materials + labor + MOH

the total cost is a given.

MHO is a given also.

The labor can be expressed as a percent or MOH using the rate

If MHO = 80% LABOR THEN

MHO/80% = LABOR

3600/0.80 = 4500

now posting the know values un the formula:

9,500 = DM + 4,500 + 3,600

DM = 9,500 - 4,500 - 3,600

DM = 1,400