Question

In: Accounting

Meadows Manufacturing has $10,000 in payroll for its factory workers that must be added the cost...

Meadows Manufacturing has $10,000 in payroll for its factory workers that must be added the cost of its product. How would Meadows record the direct labor cost?

A : a debit to Wages Payable and a credit to Work in Process Inventory

B : a debit to Work in Process Inventory and a credit to Manufacturing Overhead

C : a debit to Manufacturing Overhead and a credit to Factory Labor

D : a debit to Work in Process Inventory and a credit to Factory Labor

Solutions

Expert Solution

Correct Answer --- D : a debit to Work in Process Inventory and a credit to Factory Labor

Explanation

All the cost of Production such Direct material, Direct labor and Overheads are transferred to work in progress account by Debiting work in progress account and crediting respective head of costs such as Material cost, labor cost or Overheads. Opening and closing WIP is adjusted with current year’s cost to calculate cost of Production.

In the above case $10000 payroll would be added to cost by making the given below entry in books

Work in Progress Inventory $10000

               Factory Labor                                                      $10000

(Direct labor cost Recorded)

ekkarill92 answered 7 months ago
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