Factory overhead costs for this period were 3 times as much as the direct material costs.Prime costs totaled $2,000.Conversion costs totaled $3,280.What are the direct labor costs for the period?
A)$1,220.
B)$1,360.
C)$1,410.
D)$1,540.
$3,280 = Direct Labor Costs + Factory Overhead Costs
Direct Labor Costs = $2,000 - Direct Materials Costs
Factory Overhead Costs = 3 x (Direct Materials Costs)
Solve for Direct Materials Costs via substitution:
$3,280 = ($2,000 - Direct Materials Costs)+ 3(Direct Materials Costs)
Direct Materials Costs = $640
Direct Labor Costs = $2,000 - $640 = $1,360

Question

Quizplus · Accepted Answer

Use the formula for conversion costs: Conversion Costs = Direct Labor Costs + Factory Overhead Costs. We know that Conversion Costs = $3,280 and we just calculated that Factory Overhead Costs = $1,920. So, we can plug in these values and solve for Direct Labor Costs:
$3,280 = Direct Labor Costs + $1,920
Direct Labor Costs = $3,280 - $1,920
Direct Labor Costs = $1,360. Therefore, the correct answer is B.

Factory Overhead Costs for This Period Were 3 Times as Much