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

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Accounting

Meadows Manufacturing has $10,000 in payroll for its factoryworkers that must be added the cost of its product. How wouldMeadows record the direct labor cost?
A : a debit to Wages Payable and a credit to Work in ProcessInventory
B : a debit to Work in Process Inventory and a credit toManufacturing Overhead
C : a debit to Manufacturing Overhead and a credit to FactoryLabor
D : a debit to Work in Process Inventory and a credit to FactoryLabor

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3.7 Ratings (471 Votes)

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)

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Meadows Manufacturing has $10,000 in payroll for its factoryworkers that must be added the cost of its product. How wouldMeadows record the direct labor cost?A : a debit to Wages Payable and a credit to Work in ProcessInventoryB : a debit to Work in Process Inventory and a credit toManufacturing OverheadC : a debit to Manufacturing Overhead and a credit to FactoryLaborD : a debit to Work in Process Inventory and a credit to FactoryLabor