Question

During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use (indirect labor). In addition, factory overhead charged to production was $32,000. The journal entry to record the direct labor costs is a. Wages Payable 150,000 Work in Process 150,000 b. Wages Payable 175,000 Work in Process 175,000 c. Work in Process 150,000 Wages Payable 150,000 d. Work in Process 175,000 Wages Payable 175,000

Answer 1

Answer:

c. Work in Process 150,000 Wages Payable 150,000

Explanation:

The direct labor costs are $ 150,000 which are debited to work in process and credited by wages payable.

The indirect Labor costs are $ 125,000 which are debited to factory overhead and credited by payroll.

The $32,000 are factory overhead expenses which are charged to factory overhead control account.

Analysis :

a: The first entry is wrong because the work in process must be debited and wages payable credited.

b: The second entry is wrong because the work in process must be debited and wages payable credited. Also the indirect labor is included in the direct labor amount.

c: This entry is correct.

d:  The indirect labor is included in the direct labor amount which is again wrong.