Jetwell,Inc.incurred $2,000 for indirect labor in Department III.The journal entry to record indirect labor utilized is ________.
A) debit Manufacturing Overhead, $2,000; credit Accounts Payable, $2,000
B) debit Accounts Payable, $2,000; credit Manufacturing Overhead, $2,000
C) debit Manufacturing Overhead, $2,000; credit Wages Payable, $2,000
D) debit Wages Payable, $2,000; credit Manufacturing Overhead, $2,000

Question

Quizplus · Accepted Answer

Indirect labor is a part of manufacturing overhead, which means that it is not directly traced to a product or service. Therefore, it is appropriate to debit Manufacturing Overhead and credit Wages Payable for the amount of indirect labor utilized in Department III. Option C is the only one that correctly records this transaction. Option A incorrectly credits Accounts Payable instead of Wages Payable, while option B debits Accounts Payable instead of Manufacturing Overhead. Option D incorrectly debits Wages Payable instead of Manufacturing Overhead.