Here are selected data for Fritzel Company:

Manufacturing overhead is allocated at 60% of direct labour cost.
What was the amount of direct labour costs?

Question

Here are selected data for Fritzel Company:

Manufacturing overhead is allocated at 60% of direct labour cost.
What was the amount of direct labour costs?

Quizplus · Accepted Answer

To find out the direct labour cost, we need to use the manufacturing overhead allocation rate. 
Let D be the direct labour cost, then: 
Manufacturing overhead = 60% of D 
Manufacturing overhead = $110,625 (given)

So, 60% of D = $110,625 
D = $184,375

Therefore, the amount of direct labour cost is $184,375, which is option B.

Here Are Selected Data for Fritzel Company