Question

abburi company's manufacturing overhead is 40% of its total conversion costs. if direct labor is $63,600 and if direct materials are $23,800, the manufacturing overhead is:

Answer 1

If the cost of direct materials is $23,800 and the cost of direct labor is $63,600, the manufacturing overhead is $25,440.

What are the production conversion costs?

In order to convert raw materials into completed goods, companies must spend labor costs and other related expenses. In this example, the only conversion cost is direct labor, which comes to $63,600; as a result, the Abburi Company's manufacturing overhead represents 40% of direct labor costs.

direct labor costs x 40% of manufacturing overhead

Direct labor expenses equal $63,600

production costs = 40% * $63,600

Manufacturing costs come to $25,440.

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