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Homework answers / question archive / Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow Manufacturing Company are presented below

Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow Manufacturing Company are presented below

Accounting

Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow Manufacturing Company are presented below. 
Inventories  Beginning Ending Materials   P75 P 85 Work in process  80 30 Finished goods  90 110 
Materials used, P326 Total manufacturing costs charged to production during the year (including direct materials, direct labor, and factory overhead applied at the rate of 60% of direct labor cost), P686 Cost of goods available for sale, P826 Selling and general expenses, P25 
Direct labor costs charged to production during the year amounted to: A. P216 B. P135 C. P225 D. P360 E. none of the above

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Answer

C .

Explanation

Computation of Direct labor cost charged to production during the Year:

Direct labor cost charged to production = Total manufacturing cost - Factory overhead - Direct materials used

Here,

Let's assume 

Direct labor cost charged to production = x

So, 

Factory Overhead = 60% of x 

 

x = P686 - x*60% - P326

x + 0.60x = P360

1.60x = P360

x = P360/1.60

x = P225

 

So, Direct labor cost charged to production during the Year is P225.