Question

During June, Buttrey Corporation incurred $73,000 of direct labor costs and $13,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

Answer 1

Answer:

                                                            Dr.             Cr.

Work in process                             $73,000

Manufacturing overhead                $13,000

Account Payable                                              $86,000

Explanation:

The Direct cost are those which are directly attributable to the product or service under consideration. Indirect cost are those which cannot be directly assigned to product or service cost. All the direct cost is added to the work in process account and indirect cost are included in the manufacturing overhead account.