Recording direct labor costs in a job order cost accounting system:

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Direct labor costs are recorded as an increase in Work-in-Process, as they are a direct cost of producing the product. At the same time, they are also recorded as an increase in Wages Payable, as this is the amount owed to employees for their work. The increase in Factory Overhead is not applicable in this case, as direct labor costs are not an indirect cost. The increase in Finished Goods is not applicable either, as direct labor costs are added to the Work-in-Process account before being transferred to Finished Goods upon completion of the job.

Recording Direct Labor Costs in a Job Order Cost Accounting