Factory overhead costs for a given period were 1.5 times as much as the direct material costs.Prime costs totaled $15,500.Conversion costs totaled $22,725.What are the direct labor costs for the period?
A)$1,200.
B)$1,050.
C)$1,075.
D)$1,155.
$22,725 = Direct Labor Costs + Factory Overhead Costs
Direct Labor Costs = $15,500 - Direct Materials Costs
Factory Overhead Costs = 1.5(Direct Materials Costs)
Solve for Direct Materials Costs via substitution:
$22,725 = ($15,500 - Direct Materials Costs)+ 1.5(Direct Materials Costs)
Direct Materials Costs = $14,450
Direct Labor Costs = $15,500 - $14,450 = $1,050

Question

Quizplus · Accepted Answer

We can solve for the direct labor costs by first finding the direct materials costs and then using the formula for prime costs:

Prime Costs = Direct Materials Costs + Direct Labor Costs

We are given that prime costs totaled $15,500, so:

$15,500 = Direct Materials Costs + Direct Labor Costs

We can also use the given information that factory overhead costs were 1.5 times as much as the direct material costs to find the direct material costs:

Factory Overhead Costs = 1.5(Direct Materials Costs)

$22,725 = 1.5(Direct Materials Costs)

Direct Materials Costs = $14,450

Substituting this back into the formula for prime costs:

$15,500 = $14,450 + Direct Labor Costs

Direct Labor Costs = $1,050

Therefore, the answer is B.

Factory Overhead Costs for a Given Period Were 1