Abburi Company's manufacturing overhead is 55% of its total conversion costs. If direct labor is $58,500 and if direct materials are $29,200, the manufacturing overhead is:
A) $71,500
B) $47,864
C) $35,689
D) $107,189

Question

Quizplus · Accepted Answer

Total conversion costs = Direct labor + Direct materials
Total conversion costs = $58,500 + $29,200
Total conversion costs = $87,700

Manufacturing overhead = 55% of total conversion costs
Manufacturing overhead = 0.55 x $87,700
Manufacturing overhead = $48,235

Therefore, the closest option to the calculated manufacturing overhead is choice A which is $71,500.

Abburi Company's Manufacturing Overhead Is 55% of Its Total Conversion