A company's overhead rate is 200% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.
A) $130,000.
B) $65,000.
C) $270,000.
D) $265,000.
E) $280,000.

Question

A company's overhead rate is 200% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.   
A) $130,000. 
B) $65,000. 
C) $270,000. 
D) $265,000. 
E) $280,000.

Quizplus · Accepted Answer

Direct Labor × FOH Rate = FOH Applied
Direct Labor × 2 = $140,000
Direct Labor = $140,000/2 = $70,000
Beg Bal + DM + DL + OH − Transfer to FG = End Bal
$50,000 + DM + $70,000 + $140,000 − $265,000 = $60,000; DM = $65,000
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A Company's Overhead Rate Is 200% of Direct Labor Cost