The Titan Enterprises Company manufactures cleaning spray for public schools.During 2016,the company spent $600,000 on prime costs and $800,000 on conversion costs.Overhead is applied at a rate of 150% of direct labor costs.How much did the company allocate (apply)for manufacturing overhead during 2016?

Question

Quizplus · Accepted Answer

Prime costs include direct materials and direct labor. Conversion costs include direct labor and manufacturing overhead. Given that overhead is 150% of direct labor, and knowing prime costs ($600,000) and conversion costs ($800,000), we can set up equations to find direct labor and overhead. Let DL be direct labor and OH be overhead. Prime costs: DM + DL = $600,000. Conversion costs: DL + OH = $800,000. OH = 1.5 * DL. Solving these, DL = $320,000, OH = $480,000.

The Titan Enterprises Company Manufactures Cleaning Spray for Public Schools