Rapid Enterprises applies manufacturing overhead to its cost objects on the basis of 75% of direct material cost. If Job 17X had $72,000 of manufacturing overhead applied to it during May, the direct materials assigned to Job 17X was:
A) $54,000.
B) $72,000.
C) $96,000.
D) $126,000.

Question

Quizplus · Accepted Answer

The manufacturing overhead is 75% of the direct material cost. If $72,000 is the overhead, then the direct material cost is $72,000 / 0.75 = $96,000.

Rapid Enterprises Applies Manufacturing Overhead to Its Cost Objects on the Basis