Kirsch Corporation's standard wage rate is $13.40 per direct labor-hour (DLH) and according to the standards, each unit of output requires 8.9 DLHs. In May, 5,000 units were produced, the actual wage rate was $12.80 per DLH, and the actual hours were 41,790 DLHs. In the journal entry to record the incurrence of direct labor costs in May, the Work in Process entry would consist of a:
A) debit of $596,300.
B) debit of $534,912.
C) credit of $534,912.
D) credit of $596,300.

Question

Quizplus · Accepted Answer

The Work in Process account is debited with the standard cost of direct labor for the units produced. The standard cost is calculated as the standard wage rate multiplied by the standard hours for the actual output. For 5,000 units, the standard hours are 5,000 units * 8.9 DLHs/unit = 44,500 DLHs. The standard cost is 44,500 DLHs * $13.40/DLH = $596,300.

Kirsch Corporation's Standard Wage Rate Is $13