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7 July, 11:46

Kelson Company applies overhead to jobs on the basis of 60% of direct labor cost. If Job 201 shows $27,000 of manufacturing overhead applied, the direct labor cost on the job was: A. $16,200B. $37,800C. $45,000D. $27,000

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  1. 7 July, 12:14
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    Option "C" is the correct answer to the following statement.

    Explanation:

    Given:

    Manufacturing overhead = $27,000 (60% of labor cost)

    Overhead basis = 60% of labor cost

    Direct labor cost = ?

    Computation of direct labor cost:

    Direct labor cost = Manufacturing overhead * (100/60)

    Direct labor cost = $27,000 * (100/60)

    Direct labor cost = $27,000 * 1.66666667

    Direct labor cost = $45,000
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