Finished goods inventory is $190,000. If overhead applied to these goods is $72,000, and the overhead rate is 120% of direct labor, how much direct materials cost was incurred in producing the inventory?
A) $31,600.
B) $58,000.
C) $56,000.
D) $60,000.
E) $86,400.
B) $58,000.
Explanation: DM + DL + OH = Total cost
DM + ($72,000/1.20) + $72,000 = $190,000
DM + $60,000 + $72,000 = $190,000; DM = $58,000
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