Zeppo Supply Company manufactures cleaning products.During the year,the company spent $600,000 on chemicals and $728,000 on conversion costs.Overhead is applied at a rate of 180% of direct labor costs.How much did the company spend on manufacturing overhead during the year?

Question

Quizplus · Accepted Answer

To find the manufacturing overhead, we need to determine the direct labor costs first. Since overhead is applied at 180% of direct labor costs, we can set up the equation: Overhead = 1.8 * Direct Labor. Given that conversion costs (which include both direct labor and overhead) are $728,000, we can express this as: Direct Labor + Overhead = $728,000. Substituting the overhead equation, we get: Direct Labor + 1.8 * Direct Labor = $728,000, which simplifies to 2.8 * Direct Labor = $728,000. Solving for Direct Labor gives $260,000. Therefore, Overhead = 1.8 * $260,000 = $468,000.

Zeppo Supply Company Manufactures Cleaning Products