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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.
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
Expert Solution
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.
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