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Sargent Corporation applies overhead cost to jobs on the basis of 80% of direct labor cost. If Job 210 shows $20,480 of manufacturing overhead cost applied, how much was the direct labor cost on the job? Multiple Choice $16,384 $20,480 $25,600 $36,864

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Answer:

Direct Labor Cost on the job is $ 25,600

Explanation:

Basis of allocation of overhead is 80 % of Direct labour

Amount of Manufacturing Overhead applied is $ 20.480

so to determine the Direct Labour on the job, we have to do a reverse calculation.

$ 20,480 / 80 % = $ 25,600

We can do a check on this by recalculating the manufacturing overhead.

$ 25,600 *80 % = $ 20,480 -applied manufacturing overhead same as data provided in the question

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