Question

When the company assigns factory labor costs to jobs, the direct labor cost is debited to

A) Direct Labor.
B) Factory Labor.
C) Manufacturing Overhead.
D) Work in Process Inventory.

Answer 1

Direct labor costs incurred for specific jobs are debited to the Work in Process Inventory account, reflecting variable costs that change with production levels.

Step-by-step explanation:

When the company assigns factory labor costs to jobs, the direct labor cost is debited to Work in Process Inventory.

The costs associated with direct labor are considered variable costs, which vary with the level of output. As the company incurs labor expenses for work on specific jobs, these costs are allocated directly to the jobs being produced, which are tracked in the Work in Process Inventory account.

This is different from manufacturing overhead, which includes indirect costs that are not directly traceable to specific jobs.