Question

During the month of May, direct labor cost totaled $10,000 and direct labor cost was 40% of prime cost. If total manufacturing costs during May were $86,000, the manufacturing overhead was:

Answer 1

Answer:

$61,000

Explanation:

Given that

Direct labor = $10,000

Manufacturing overhead = $86,000

Given percentage = 40%

The computation of the manufacturing overhead cost is shown below:

Prime cost = $10,000 × 100 ÷ 40 = $25,000

Manufacturing cost = $86,000

And we know that

Manufacturing overhead = Manufacturing cost - Prime cost

= $86,000 - $25,000

So, manufacturing overhead is $61,000