Question

The total prime cost of a product was OMR4,400. The variable manufacturing overhead is calculated based on the number of direct labor hours. The variable manufacturing overhead cost per hour is three times the direct labor cost per hour. The fixed manufacturing overhead was OMR1,500. Assuming that direct labor hours were 300 and that the direct labor cost was 10% of direct materials cost, how much is the total manufacturing cost? Select one:

a. OMR7,100

b. OMR5,900

c. OMR17,600

d. OMR13,100

e. OMR19,100

CLEAR MY CHOICE

Answer 1

Answer is A- OMR 7,100. Below is working-

Prime cost	4,400
Labor cost	10% of material cost
Prime cost =	Cost of Goods Sold + Labor cost
	Material cost + labor cost
Prime cost =	1.1 material cost
Material cost	4,400/1.1
Material cost	4,000
Labor cost	prime cost- material cost
Labor cost	4400-4000
Labor cost	400
Variable OH cost	3 times labor cost
Variable OH cost	3*400
Variable OH cost	1,200
Fixed OH cost	1,500
Total cost	material cost + labor cost + variable OH + fixed OH
	7,100