For a particular month a company had opening raw material stock of 11,570, closing stock of 10,380, raw material purchases of 1,28,450 and a total manufacturing cost of 3,39,165. If factory overheads are applied at 45% of direct labour cost, how much overhead was applied to production?
Correct answer B. 65,025
Explanation
Materials used = 11,570 + 1,28,450 - 10,380 = 1,29,640, leaving conversion cost of 2,09,525 = 1.45 x labour; labour is 1,44,500, so overheads are 45% of that, 65,025.
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