Furst Company pays production workers' salaries on account.The cost will be recognized as an expense when:
A) the goods made by the production workers are sold.
B) the manufacturing process is complete.
C) the cash is paid to settle the associate account payable.
D) none of these.

Question

Quizplus · Accepted Answer

The production workers' salaries are classified as direct labor costs.When incurred,these costs are added to the Work in Process Inventory account.The total cost of the goods completed during the period is transferred from the Work in Process Inventory account to the Finished Goods Inventory account.The cost of the goods that are sold during the accounting period is transferred from the Finished Goods Inventory account to the Cost of Goods Sold account.As such,the cost of direct labor is expensed at the time the manufactured goods are sold.

Furst Company Pays Production Workers' Salaries on Account