The ending inventory of finished goods has a total cost of $11,600 and consists of 600 units. If the overhead applied to these goods is $3,850, and the overhead rate is 70% of direct labor, how much direct materials cost was incurred in producing these units?

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Business

Emery Kirby

10 November, 19:18

The ending inventory of finished goods has a total cost of $11,600 and consists of 600 units. If the overhead applied to these goods is $3,850, and the overhead rate is 70% of direct labor, how much direct materials cost was incurred in producing these units?

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Tessa · Answer 1

the Direct Labor Costs are $5500

And Direct Materials are 2,250

Explanation:

Finished Goods has a total cost of $11,600

If the overhead applied to these goods is $3,850

Then the Direct Labor Costs are $5500

And Direct Materials are 2,250

Using the cross product rule

$3850 : 70

x : 100

x = $3850*100/70 = $ 5500 are Direct LAbor Costs

Direct Materials = Finished Goods - overhead applied - Direct Labor Costs

Direct Materials = $11,600 - $3,850 - $5500

And Direct Materials are = $2,250