Canberra Company uses a job order cost accounting system. During the current month, the factory payroll of $180,000 was paid in cash. The amount of labor classified as indirect labor was three times greater than the amount classified as indirect labor. What amount should be debited to Factory Overhead for indirect labor for this month?

Question

Quizplus · Accepted Answer

Since the amount classified as indirect labor is one-third of the total labor cost, we can calculate the amount of indirect labor as follows:

Indirect labor cost = Total labor cost x (1/3)

Indirect labor cost = $180,000 x (1/3)

Indirect labor cost = $60,000

Therefore, the amount to be debited to Factory Overhead for indirect labor for this month is $45,000 (which is the indirect labor cost after subtracting the direct labor cost of $60,000 from the total labor cost of $180,000).

Canberra Company Uses a Job Order Cost Accounting System