If Custom Craft uses a job order cost system, each of the following is true except:
A) Individual job cost sheets accumulate all manufacturing costs applicable to each job and together constitute a subsidiary ledger for the Work in Process Inventory account.
B) Direct labor cost applicable to individual jobs is recorded when paid by a debit to Work in Process Inventory and a credit to Cash, as well as by entering the amount on the job cost sheets.
C) The amount of direct materials used in individual jobs is recorded by debiting the Work in Process Inventory account and crediting the Materials Inventory account, as well as by entering the amount used on job cost sheets.
D) The manufacturing overhead applied to each job is transferred from the Manufacturing Overhead account to the Work in Process Inventory account, as well as entered on the individual job cost sheets.

Question

Quizplus · Accepted Answer

Option B is not entirely true, as direct labor costs are not recorded when paid but rather when they are incurred. The correct entry would be a debit to Work in Process Inventory and a credit to Wages Payable or Salaries Payable.

If Custom Craft Uses a Job Order Cost System, Each