Question

During the month of May, direct labor cost totaled $13,230 and direct labor cost was 45% of prime cost. If total manufacturing costs during May were $81,600, the manufacturing overhead was:

Answer 1

Answer:

$38,970= allocated overhead

Explanation:

Giving the following information:

direct labor cost totaled $13,230

direct labor cost was 45% of prime cost.

The total manufacturing costs in May were $81,600.

The prime cost is calculated summing the direct material and direct labor cost.

First, we need to calculate the direct material cost:

Direct material= (13,230*100)/45= 29,400

Prime costs= 29,400 + 13,230= 42,630

Now, we can calculate the allocated overhead:

total manufacturing costs= direct materials + direct labor + allocated manufacturing overhead

81,600= 42,630 + allocated overhead

38,970= allocated overhead