Creative Accountant CPAs, LLC is a service firm and applies overhead based upon direct labor cost. For the year 2025, the actual overhead cost incurred totaled $50,000. Creative Accountant CPAs, LLC had underapplied overhead cost of $10,000. The company utilized an overhead application rate of 50% of direct labor cost. What was the total direct labor cost incurred for the year?

Question

Quizplus · Accepted Answer

Actual MOH cost - Underapplied MOH = Applied MOH = ($50,000 - $10,000) = $40,000; Applied MOH/DL MOH rate = $40,000/50% = $80,000 actual direct labor cost incurred

Creative Accountant CPAs, LLC Is a Service Firm and Applies