Question

A company's prime costs total $4,563,000 and its conversion costs total $5,570,000. If direct materials costs are $2,077,000, calculate the overhead costs:

Answer 1

Answer:

overhead cost will be equal to  = $3,084,000

Explanation:

given,

total company's prime cost  = $4,563,000

total conversion cost = $5,570,000

direct material cost  = $2,077,000

hence,

direct labor = prime cost - direct material cost

                   = $4,563,000 - $2,077,000

                   = $2,486,000

we know,

overhead costs = conversion cost - direct labor cost

                           = $5,570,000 - $2,486,000

                           = $3,084,000

hence, overhead cost will be equal to  = $3,084,000