Wessex Pty Ltd applies overhead to completed jobs using a predetermined rate of 75% of direct labour costs. If Job No. 34 shows $30 000 of factory overhead applied, how much was the direct labour cost of the job?

Question

Quizplus · Accepted Answer

The direct labour cost is calculated by dividing the applied factory overhead by the predetermined overhead rate. Given that the overhead applied is $30,000 and the rate is 75% (or 0.75) of direct labour costs, the direct labour cost is $30,000 / 0.75 = $40,000.

Wessex Pty Ltd Applies Overhead to Completed Jobs Using a Predetermined