Information relating to direct labor for the McGill Company follow: The entry to record the direct labor cost is:

Question

Information relating to direct labor for the McGill Company follow:  The entry to record the direct labor cost is:

Quizplus · Accepted Answer

Direct labor cost is recorded with the entry of Work in process (the account that captures the cost of partially completed goods) debited with the total direct labor cost (which is $48,600 in this case) and credited with Labor rate variance (debit balance of $2,800) and Labor efficiency variance (debit balance of $1,800), resulting in a credit of $53,200 to Payroll (the account that records the cost of all employee compensations). Therefore, the correct entry is Work in process 48,600 Labor rate variance 2,800 Labor efficiency variance 1,800 Payroll 53,200. Choice C is the only option that reflects this entry.

Information Relating to Direct Labor for the McGill Company Follow