Question

During the month of April, direct labor cost totaled $9,750 and direct labor cost was 30% of prime cost. If total manufacturing costs during April were $74,500, the manufacturing overhead was:

Answer 1

manufacturing overhead= $42,000

Step-by-step explanation:

Giving the following information:

Direct labor= $9,750 (30% of prime costs)

Total manufacturing costs= $74,500

First, we need to determine the direct material costs. We know that prime costs are the sum of direct labor and direct material.

Prime costs= direct labor / 0.3

Prime costs= 9,750 /0.3

Prime costs= $32,500

Direct material= 32,500 - 9,750

Direct material= $22,750

Now, we can calculate the manufacturing overhead:

Total manufacturing costs= direct labor + direct material + manufacturing overhead

74,500 = 9,750 + 22,750 + manufacturing overhead

manufacturing overhead= $42,000