The entry to record the flow of direct labor costs into production in a job order cost accounting system is:

(a) - debit Factory Overhead, credit Work in Process

(b) - debit Factory Overhead, credit Wages Payable

(c) - debit Finished Goods, credit Wages Payable

(d) - debit Work in Process, credit Wages Payable

Question

Cassandra Christensen

Business

1 October, 18:53

The entry to record the flow of direct labor costs into production in a job order cost accounting system is:

(a) - debit Factory Overhead, credit Work in Process

(b) - debit Factory Overhead, credit Wages Payable

(c) - debit Finished Goods, credit Wages Payable

(d) - debit Work in Process, credit Wages Payable

+1

Answers (1)

Know the Answer?

Jaylene Buck · Answer 1

The correct answer is d. Debit Work in Process, credit Wages Payable.

Explanation:

Three general types of inventory accounts are used in cost accounting: raw materials, work in progress and finished items.

Charges to the work-in-process account consist of the three elements of manufacturing costs: raw materials used, direct labor and indirect manufacturing costs. The costs of the raw materials used and direct labor, which are normally produced, are charged directly to the Work in process account.

However, indirect manufacturing costs are accumulated first in a ledger account entitled Indirect manufacturing costs and then transferred or applied to the Work in process account.