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29 August, 20:46

The ending inventory of finished goods has a total cost of $9,500 and consists of 600 units. If the overhead applied to these goods is $3,600, and the overhead rate is 80% of direct labor, how much direct materials cost was incurred in producing these units?

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  1. 29 August, 23:53
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    Direct Materials = 1,400

    Explanation:

    Using the total cost formula we will solve for materials

    total cost = materials + labor + MOH

    the total cost is a given.

    MHO is a given also.

    The labor can be expressed as a percent or MOH using the rate

    If MHO = 80% LABOR THEN

    MHO/80% = LABOR

    3600/0.80 = 4500

    now posting the know values un the formula:

    9,500 = DM + 4,500 + 3,600

    DM = 9,500 - 4,500 - 3,600

    DM = 1,400
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