Question

A company's prime costs total $4,563,000 and its conversion costs total $5,570,000. If direct materials costs are $2,077,000, calculate the overhead costs:

Answer 1

To calculate the overhead costs, subtract the direct materials costs from the prime costs.

Step-by-step explanation:

To calculate the overhead costs, we need to subtract the direct materials costs from the prime costs. Prime costs include the direct materials and direct labor costs, while the conversion costs include direct labor and manufacturing overhead costs.

Prime costs = Direct materials costs + Direct labor costs

Conversion costs = Direct labor costs + Manufacturing overhead costs

Therefore, Manufacturing overhead costs = Conversion costs - Direct labor costs = $5,570,000 - $2,077,000.

The overhead costs of the company are $3,493,000.

Answer 2

overhead cost will be equal to = $3,084,000

Step-by-step explanation:

given,

total company's prime cost = $4,563,000

total conversion cost = $5,570,000

direct material cost = $2,077,000

hence,

direct labor = prime cost - direct material cost

= $4,563,000 - $2,077,000

= $2,486,000

we know,

overhead costs = conversion cost - direct labor cost

= $5,570,000 - $2,486,000

= $3,084,000

hence, overhead cost will be equal to = $3,084,000