Direct Materials and Labour – Short Answer

Practice Question

Intro to Managerial Accounting
Managerial Cost Concepts & Cost Behaviour Analysis
Direct Materials and Direct Labour
Short Answer

A company produces widgets and incurs the following costs: Direct materials cost $200,000, Direct labor $150,000, Variable overhead $100,000, and Fixed overhead $50,000. How much is the total manufacturing cost?

Answer +
Correct Answer: $500,000
Explanation +

Step 1: Identify key components – Direct Materials = $200,000, Direct Labor = $150,000, Variable Overhead = $100,000, Fixed Overhead = $50,000

Step 2: Total Manufacturing Cost = $200,000 + $150,000 + $100,000 + $50,000 = $500,000

Step 3: Conclusion – The total manufacturing cost is $500,000