In May direct labor was 20% of conversion cost. If the manufacturing overhead for the month was $153,600 and the direct materials cost was $25,600, the direct labor cost was:
Multiple Choice
$614,400
$38,400
$102,400
$6,400
Answer: $38,400
Calculations:
Conversion cost = Direct labor + Manufacturing overhead
If direct labor is 20% of conversion cost then manufacturing overhead is 80% of conversion costs. So that,
0.80 x Conversion cost = Manufacturing overhead
0.80 x Conversion cost = $153,600
Conversion costs = $153,600/0.80 = $192,000
Direct labor = $192,000 x 20% = $38,400
In May direct labor was 20% of conversion cost. If the manufacturing overhead for the month...
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