Juarez Builders incurred $285,000 of labor costs for construction jobs completed during the month of August,of which $212,000 was direct and $73,000 was indirect supervisory costs.The correct journal entry to record the $73,000 indirect labor for the month is:
A)Debit Supervisor Wage Expense;credit Factory Wages Payable.
B)Debit Factory Overhead;credit Factory Wages Payable.
C)Debit Supervisor Wage Expense;credit Factory Overhead.
D)Debit Factory Wages Payable;credit Factory Overhead.
E)Debit Factory Wage Expense;credit Cash.

Question

Quizplus · Accepted Answer

Indirect labor costs are part of factory overhead costs, which are not directly related to the production of a specific job. Therefore, the correct journal entry is to debit Factory Overhead and credit Factory Wages Payable. Choice A is incorrect because it incorrectly categorizes indirect labor as supervisor wages. Choice C is incorrect because it debits supervisor wage expense, which only covers direct labor costs related to a specific job. Choice D is incorrect because it only covers direct labor costs, not indirect labor costs. Choice E is incorrect because it incorrectly categorizes factory wages as an expense instead of a liability.

Juarez Builders Incurred $285,000 of Labor Costs for Construction Jobs