Question

Boxer Industries worked on four jobs during its first year of operation: nos. 401, 402, 403, and 404. A review of job no. 403's cost record revealed direct material charges of $40,000 and total manufacturing costs of $50,000. If Boxer applies overhead at 150% of direct labor cost, the overhead applied to job no. 403 must have been:

Answer 1

Answer:

$6,000

Explanation:

For computing the overhead applied first we have to determine the direct labor cost which is shown below:

Let us assume the direct labor cost be X

So the equation is

Total Manufacturing overhead = Direct Material cost  + Direct Labor cost + Manufacturing Overhead  cost

$50,000 = $40,000 + X + 1.50X

$10,000 = 2.50X

So X = 4,000

So, the overhead applied is

= $4,000 × 150%

= $6,000