Williams Company's direct labour cost is 25% of its conversion cost.If the manufacturing overhead cost for the last period was $45,000 and the direct materials cost was $25,000,the direct labour cost was:

Question

Quizplus · Accepted Answer

Conversion cost is the sum of direct labour and manufacturing overhead. If direct labour is 25% of conversion cost, then manufacturing overhead is 75%. Given manufacturing overhead is $45,000, the conversion cost is $60,000. Therefore, direct labour cost is 25% of $60,000, which is $15,000.

Williams Company's Direct Labour Cost Is 25% of Its Conversion