Knowlton Company applies overhead to completed jobs on the basis of 70% of direct labour cost.If Job 501 shows $21,000 of manufacturing overhead applied,what was the direct labour cost on the job?

Question

Quizplus · Accepted Answer

Manufacturing overhead applied is 70% of direct labour cost.
Let's assume the direct labour cost on the job is x. 
So, Manufacturing overhead applied = 70% of x = 0.70x 
Given, Manufacturing overhead applied = $21,000 
So, 0.70x = $21,000 
x = $30,000 
Therefore, the direct labour cost on the job was $30,000.

Knowlton Company Applies Overhead to Completed Jobs on the Basis