Surrey Pty Ltd applies overhead to completed jobs using a predetermined rate of 60% of direct labour costs. If Job No. 22 shows $12 000 of factory overhead applied, how much was the direct labour cost of the job?

Question

Quizplus · Accepted Answer

The factory overhead applied is 60% of the direct labour cost. If $12,000 is the overhead, then the direct labour cost is $12,000 / 0.60 = $20,000.

Surrey Pty Ltd Applies Overhead to Completed Jobs Using a Predetermined