Asked by Nicole White on Jun 12, 2024
Verified
Oxford Company uses a job order costing system.In the last month,the system accumulated labor time tickets total $24,600 for direct labor and $4,300 for indirect labor.How are these costs recorded?
A) Debit Payroll Expense $28,900; credit Cash $28,900.
B) Debit Payroll Expense $24,600; debit Factory Overhead $4,300; credit Factory Wages Payable $28,900.
C) Debit Work in Process Inventory $24,600; Debit Factory Overhead $4,300; Credit Factory Wages Payable $28,900.
D) Debit Work in Process Inventory $24,600; credit Factory Wages Payable $28,900.
E) Debit Work in Process Inventory $28,900; credit Factory Wages Payable $28,900.
Work in Process Inventory
Items in a manufacturing process that are not yet completed products; it includes raw materials, labor, and overhead costs incurred up to that point.
Factory Overhead
All indirect costs associated with manufacturing, excluding direct materials and direct labor expenses. It includes costs like utilities and maintenance of machinery.
Factory Wages Payable
Amounts owed to factory workers for labor that has been performed but not yet paid.
- Illustrate the technique for dealing with direct and indirect labor costs in job costing.
- Understand the documentation and progression of expenses within a job order costing system.
Verified Answer
AD
Allyssa DaytonJun 15, 2024
Final Answer :
C
Explanation :
In a job order costing system, direct labor costs are charged directly to the Work in Process Inventory account, and indirect labor costs are charged to the Factory Overhead account. The total labor cost is credited to Factory Wages Payable. Therefore, option C correctly reflects the accounting treatment for both direct and indirect labor costs.
Learning Objectives
- Illustrate the technique for dealing with direct and indirect labor costs in job costing.
- Understand the documentation and progression of expenses within a job order costing system.