Accounting Topic: Labor cost accounting Fisheries Manufacturing Co. charges factory overhead to production at 80% of direct labor cost. Jobs 844 and 845 were completed and sold in July. Total direct materials cost and prime cost for Job 844 were P9,000 and P14,000, respectively. The production cost of Job 845 amounted to P31,200 with factory overhead equal to 48% of direct materials cost. How much were the direct labor costs of Jobs 844 and 845? Show a detailed solution.

Accounting Topic: Labor cost accounting Fisheries Manufacturing Co. charges factory overhead to production at 80% of direct labor cost. Jobs 844 and 845 were completed and sold in July. Total direct materials cost and prime cost for Job 844 were P9,000 and P14,000, respectively. The production cost of Job 845 amounted to P31,200 with factory overhead equal to 48% of direct materials cost. How much were the direct labor costs of Jobs 844 and 845? Show a detailed solution.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Accounting

Topic: Labor cost accounting

Fisheries Manufacturing Co. charges factory overhead to production at 80% of direct labor cost. Jobs 844 and 845 were completed and sold in July. Total direct materials cost and prime cost for Job 844 were P9,000 and P14,000, respectively. The production cost of Job 845 amounted to P31,200 with factory overhead equal to 48% of direct materials cost. How much were the direct labor costs of Jobs 844 and 845?

Show a detailed solution.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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