Sargent Corporation applies overhead cost to jobs on the basis of 90% of direct labor cost. If Job 210 shows $18,810 of manufacturing overhead cost applied, how much was the direct labor cost on the job?
A) $20,900
B) $35,739
C) $16,929
D) $18,810

Question

Quizplus · Accepted Answer

The direct labor cost is calculated by dividing the manufacturing overhead cost applied by the overhead rate. Given that the overhead rate is 90% of direct labor cost, we can set up the equation: $18,810 = 90% of direct labor cost. Solving for direct labor cost gives us $20,900.

Sargent Corporation Applies Overhead Cost to Jobs on the Basis