Verrett Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year: What is the journal entry to record the direct and indirect labor costs incurred during the year?

Question

Verrett Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year:  What is the journal entry to record the direct and indirect labor costs incurred during the year?

Quizplus · Accepted Answer

Direct labor and indirect labor costs are recorded separately. Direct labor costs are debited to Work in Process Inventory, while indirect labor costs are debited to Manufacturing Overhead. Therefore, the journal entry to record the direct and indirect labor costs incurred during the year would be to debit Work in Process Inventory for $595,000 and Manufacturing Overhead for $255,000, and credit Salaries Payable for $850,000. Option A is the only choice that reflects this journal entry.

Verrett Corporation Is a Manufacturer That Uses Job-Order Costing