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13 August, 18:33

In May direct labor was 60% of conversion cost. If the manufacturing overhead for the month was $54,000 and the direct materials cost was $30,000, the direct labor cost was: a. $20,000 b. $45,000 c. $81,000 d. $36,000

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  1. 13 August, 22:33
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    The correct answer is C.

    Explanation:

    Giving the following information:

    In May direct labor was 60% of conversion cost. If the manufacturing overhead for the month was $54,000.

    We know that:

    Conversion cost = direct labor + manufacturing overhead

    If direct labor was 60% of conversion costs, overhead was 40%.

    Rule of 3:

    40%=54,000

    60% = x

    x = (0.60*54,000) / 0.40

    x = 81,000

    Direct labor = 81,000
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