Sweet Company applies overhead to jobs on the basis of 125% of direct labour cost.If Job 107 shows $10,000 of manufacturing overhead applied,how much was the direct labour cost on the job?

Question

Quizplus · Accepted Answer

The direct labor cost is calculated by dividing the manufacturing overhead applied by the overhead rate. Given that the overhead applied is $10,000 and the rate is 125% of direct labor cost, we divide $10,000 by 1.25 (or 125%) to find the direct labor cost, which is $8,000.

Sweet Company Applies Overhead to Jobs on the Basis of 125