Question

During the month of November, direct labour cost totalled $24,000 and direct labour cost was 30%...

During the month of November, direct labour cost totalled $24,000 and direct labour cost was 30% of prime cost. If total manufacturing costs during June were $105,000, the manufacturing overhead was:

Select one:

a. $25,000

b. $35,000

c. $56,000

d. $80,000

e. $81,000

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Answer #1

Answer is :option a) $25000

For computing manufacturing overhead,first we have to compute prime cost.

Given, direct labour cost = 30% of prime cost

Direct labour cost = $24000

Therefore, prime cost =$24000/30%

=$ 80000

Computation of manufacturing overhead

Prime cost + manufacturing overhead =total manufacturing cost

$80000 +manufacturing overhead = $ 105000

Therefore ,manufacturing overhead = $105000-$80000

= $ 25000

(Prime cost is the sum of direct material,direct labour and direct expenses)

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