Othello Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor. The proper journal entry to record these events would include a debit to Work in Process for:
A) $0 because Work in Process should be credited.
B) $0 because Work in Process is not affected.
C) $11,000.
D) $106,000.
E) $117,000.

Question

Quizplus · Accepted Answer

Direct labor is directly related to production, and therefore, it is debited to Work in Process. Indirect labor is not directly attributable to production and is not debited to Work in Process. The total direct and indirect labor costs incurred by Othello Manufacturing is $106,000 + $11,000 = $117,000, but only the direct labor cost of $106,000 is debited to Work in Process. Therefore, the correct answer choice is D, $106,000.

Othello Manufacturing Incurred $106,000 of Direct Labor and $11,000 of Indirect