For a particular period, Petersen's opening and closing work in process balances were $20 000 and $14 000 respectively. Direct materials used was $200 000 and overhead applied was $130 000. Cost of goods manufactured was $490 000. What was the amount of direct labour cost incurred for the period?
A) $148 000
B) $154 000
C) $160 000
D) $504 000

Question

Quizplus · Accepted Answer

The direct labor cost can be calculated using the formula for Cost of Goods Manufactured (COGM): COGM = Opening Work in Process + Direct Materials + Direct Labor + Overhead - Closing Work in Process. Rearranging to solve for Direct Labor gives: Direct Labor = COGM - Opening Work in Process - Direct Materials - Overhead + Closing Work in Process. Plugging in the given values: Direct Labor = $490,000 - $20,000 - $200,000 - $130,000 + $14,000 = $154,000.

For a Particular Period, Petersen's Opening and Closing Work in Process