Question

Direct labor and indirect labor are recorded, respectively, to:

Answer 1

Answer:

d. Work in Process Inventory and Factory Overhead.

Explanation:

Direct labor is labor that is directly involved in the production process, for example a machine operator in a factory is supplying direct labor. So when recording direct labor we do so under work in process inventory as that is where the labour is applied.

Indirect labour is one that is not directly involved in the production process, for example office cleaners, building maintenance. Since their contribution is not directly impacting production, indirect labor is recorded under factory overhead.

Answer 2

Answer:

The correct answer is letter "D": Work in Process Inventory and Factory Overhead.

Explanation:

Work In Process Inventory is the account on the company's Balance Sheet that tracks the total costs of unfinished products currently in the process of production such as direct labor or raw materials costs.  

Factory overhead is the account used to record costs to be paid, even if the company is not receiving any profits from them. Without overhead expenses such as insurance, rent, employees' compensation, and accounting and legal expenditures the company would not be able to operate.