Question

The ending inventory of finished goods has a total cost of $11,600 and consists of 600 units. If the overhead applied to these goods is $3,850, and the overhead rate is 70% of direct labor, how much direct materials cost was incurred in producing these units?

Answer 1

the Direct Labor Costs are $5500

And Direct Materials are 2,250

Step-by-step explanation:

Finished Goods has a total cost of $11,600

If the overhead applied to these goods is $3,850

Then the Direct Labor Costs are $5500

And Direct Materials are 2,250

Using the cross product rule

$3850 : 70

x : 100

x= $3850*100/70= $ 5500 are Direct LAbor Costs

Direct Materials= Finished Goods - overhead applied -Direct Labor Costs

Direct Materials =$11,600- $3,850- $5500

And Direct Materials are = $2,250