Predetermined overhead rate based on direct labor cost = Budgeted overhead cost / direct labor cost / 100 Predetermined overhead rate based on direct labor cost = budgeted overhead cost / direct labor hours.
cost of direct labor is the total cost of workers involve in production divided by normal capacity is per unit direct labor cost.
Direct labor is a product cost because without labor no product can be produce and it has direct relation with production of goods.
Manufacturing Overheads = 20% of Conversion CostTotal Conversion Cost = ?Total Conversion Cost = Direct Labor + Manufacturing Overheads100% = 80% + 20%Total Conversion Cost = direct labor * 100/80Direct labor = 38000Total Conversion Cost = 38000 * 100/80Total Conversion Cost = 47500Manufacturing Cost = Total Conversion Cost - Direct LaborManufacturing Cost = 47500 - 38000Manufactruring Cost = 9500
60000 + 30000 = 90000 = 60% / 60 = 1500 = 1% x 100 = 150000 = 100% X .4 = 60000 The above solution is incorrect. By definition, the conversion cost is the sum of the direct labor cost and the overhead. Therefore, if we assume x is the conversion cost, then x = 0.4x + 60,000. The solution is conversion cost = 100,000. Hence, the direct labor cost = 40,000. Note that the knowing the direct material cost is not necessary for the computation of the labor cost. I am really bad at math so i just have to think you are right on this one
Average direct labor cost is the opening direct labor cost + closing direct labor cost / 2
If direct labor cost creates impact or influences the decision then it is relevant cost but if direct labor is not creating influence or changing in decision then it is irrelevant cost for example direct labor cost remain same irrespective of whatever the decision then direct labor cost is also irrelevant.
direct labor is direct cost attributable to production of goods.
Predetermined overhead rate based on direct labor cost = Budgeted overhead cost / direct labor cost / 100 Predetermined overhead rate based on direct labor cost = budgeted overhead cost / direct labor hours.
cost of direct labor is the total cost of workers involve in production divided by normal capacity is per unit direct labor cost.
In labor intensive industry direct labor cost is used as cost driver.
Direct labor is a product cost because without labor no product can be produce and it has direct relation with production of goods.
Direct labor cost is part of prime cost as well as it is part of conversion cost as well.
Indirect labor is that kind of labor which is not directly involved in making of unit of product that's why it is not a direct labor and that's why it is not prime cost of unit of product and that's why it is shown in overheads
Direct labor is a product cost as it is required to manufacture the units of product, Direct Labor may be a period cost in that period where there is no production but management still paying the labor all salaries and wages.
Prime cost basically is the cost of direct labor and cost of direct material; whereas conversion costs is Overhead cost and direct labor cost.
Total Manufacturing Cost = Direct Material + Direct Labor + Factory Overheads Prime Cost = Direct material + Direct Labor Conversion Cost = Direct Labor + Factory Overhead So yes prime cost and conversion cost is equal to total manufacturing cost