Rapid Enterprises applies manufacturing overhead to its cost objects on the basis of 75% of direct material cost. If Job 17X had $84,000 of manufacturing overhead applied to it during May, the direct materials assigned to Job 17X was:

a. $63,000.

b. $84,000.

c. $112,000.

d. $147,00

Direct material cost = $112,000

Explanation:

Pre-determined overhead absorption rate rate = Estimated overhead for the period / estimated direct material cost

Pre-determined overhead absorption rate rate (OAR = 75% of direct material cost

Applied overhead = OAR * direct material cost

Applied overhead = 75% * direct material cost

Let direct material cost be represented by y

84,000 = 75% * y

y = 84,000/75% = 112000

Direct material cost = $112,000