Williams Company's direct labour cost is 25% of its conversion cost.If the manufacturing overhead cost for the last period is $45,000 and the direct materials cost is $25,000,what is the direct labour cost?
A) $15,000.
B) $60,000.
C) $33,333.
D) $20,000.CC = DL + OHx = 60,000 Therefore DL 60,000 * .25 = $15,000

Question

Quizplus · Accepted Answer

The conversion cost (CC) is the sum of direct labour (DL) and manufacturing overhead (OH). Given that DL is 25% of CC, we can set up the equation: DL = 0.25 * (DL + OH). With OH = $45,000, we solve for DL: DL = 0.25 * (DL + 45,000). Solving this gives DL = $15,000.

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