Wilturner Company incurs $74,000 of labor related directly to the product in the Assembly Department,$23,000 of labor not directly related to the product but related to the Assembly Department as a whole,and $10,000 of labor for services that help production in both the Assembly and Finishing departments.The journal entries to record the labor would include:
A)Debit Work in Process Inventory $74,000;debit Factory Overhead $33,000.
B)Debit Work in Process Inventory $74,000;debit Wages Expense $33,000.
C)Debit Work in Process Inventory $97,000;debit Wages Expense $10,000.
D)Debit Work in Process Inventory $107,000.
E)Debit Work in Process Inventory $97,000;debit Factory Overhead $10,000.

Question

Quizplus · Accepted Answer

The direct labor cost of $74,000 should be recorded as a debit to Work in Process Inventory. The indirect labor cost of $23,000 should be recorded as a debit to Factory Overhead. The labor cost of $10,000 for services that help production in both departments should be split between the Assembly and Finishing Departments based on their usage. Therefore, $10,000 x (74,000/74,000+10,000) = $9,091 should be debited to Work in Process Inventory-Assembly Department, and $10,000 x (10,000/74,000+10,000) = $909 should be debited to Work in Process Inventory-Finishing Department. Thus, the total labor cost recorded in the ledger would be a debit to Work in Process Inventory of $74,000 + $9,091 + $909 = $84,000 and a debit to Factory Overhead of $23,000. However, the question only offers choices that include a total of $97,000 or $107,000, so option E, which is a debit to Work in Process Inventory of $97,000 and a debit to Factory Overhead of $10,000, is the best choice.

Wilturner Company Incurs $74,000 of Labor Related Directly to the Product