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 calculate the direct labour cost, we need to divide the manufacturing overhead allocated by 60% or 0.6.

Let x be the direct labour cost:

0.6x = $110,625

x = $110,625 / 0.6

x = $184,375

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

Here Are Selected Data for Fritzel Company