Factory Overhead Costs for a Given Period Were 1

question 19

Multiple Choice

Factory overhead costs for a given period were 1.5 times as much as the direct material costs.Prime costs totaled $15,500.Conversion costs totaled $22,725.What are the direct labor costs for the period?

• A)$1,200.
• B)$1,050.
• C)$1,075.
• D)$1,155.
• $22,725 = Direct Labor Costs + Factory Overhead Costs
• Direct Labor Costs = $15,500 - Direct Materials Costs
• Factory Overhead Costs = 1.5(Direct Materials Costs)
• Solve for Direct Materials Costs via substitution:
• $22,725 = ($15,500 - Direct Materials Costs)+ 1.5(Direct Materials Costs)
• Direct Materials Costs = $14,450
• Direct Labor Costs = $15,500 - $14,450 = $1,050

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Definitions:

Direct Labor-Hours

The sum of the hours spent by workers directly manufacturing a product.

Variable Overhead

Indirect production costs that fluctuate with the level of output, such as utilities or materials used in the manufacturing process.

Efficiency Variance

A measure used in cost accounting to evaluate the efficiency of resource usage, calculated as the difference between actual usage and the standard or expected usage.

Materials Price Variance

The variance between the standard cost and the actual expense of materials, calculated by multiplying the amount bought.