The Childers Company manufactures widgets. During the fiscal year just ended, the company incurred prime costs of P1,500,000 and conversion costs of P1,800,000. Overhead is applied at the rate of 200% of direct labor cost. How much of the above costs represent material cost?

The Childers Company manufactures widgets. During the fiscal year just ended, the company incurred prime costs of P1,500,000 and conversion costs of P1,800,000. Overhead is applied at the rate of 200% of direct labor cost. How much of the above costs represent material cost?

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter15: Introduction To Managerial Accounting

Section: Chapter Questions

Problem 3CMA: A firm has 100,000 in direct materials costs, 50,000 in direct labor costs, and 80,000 in overhead....

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Question

The Childers Company manufactures widgets. During the fiscal year just ended, the company incurred prime costs of P1,500,000 and conversion costs of P1,800,000. Overhead is applied at the rate of 200% of direct labor cost. How much of the above costs represent material cost?

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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