A company’s prime costs total $4,608,000…

Question:

A company’s prime costs total $4,608,000 and its conversion costs total $5,620,000. If direct materials are $2,132,000, calculate the overhead costs:

Answer:

Prime costs = direct material cost + direct labor
hence , direct labor = prime cost – direct material cost
= 4608000 – 2132000
= 2476000
Conversion cost = direct labor + manufacturing overhead
hence
manufacturing overhead costs = conversion cost – direct labor cost
= 5620000 – 2476000
= 3144000

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