Answer:
Step-by-step explanation:
(a) To record the factory labor costs for the month of January, we need to consider the gross earnings of the factory workers, employer's payroll taxes, and fringe benefits.
First, let's calculate the total factory labor costs. We know that the gross earnings of the factory workers are $61,000. To this, we add the employer's payroll taxes of $9,600 and the fringe benefits of $6,400. Therefore, the total factory labor costs would be:
$61,000 + $9,600 + $6,400 = $77,000
To record this, we will debit the Factory Labor Cost account for $77,000. This will represent the total factory labor costs for the month.
Factory Labor Cost $77,000
Gross Earnings of Factory Workers $61,000
Employer's Payroll Taxes $9,600
Fringe Benefits $6,400
(b) To assign factory labor to production, we need to consider the proportion of direct labor and indirect labor.
From the information given, we know that 80% of the total accumulated cost of factory labor is related to direct labor, and 20% is attributable to indirect labor.
To assign the factory labor costs to production, we will debit the Work in Process Inventory account for 80% of the total factory labor costs, and credit the Factory Labor Cost account for the same amount. This will represent the direct labor portion.
We will also debit the Manufacturing Overhead account for 20% of the total factory labor costs, and credit the Factory Labor Cost account for the same amount. This will represent the indirect labor portion.
Work in Process Inventory $61,600 (80% of $77,000)
Factory Labor Cost $61,600
Manufacturing Overhead $15,400 (20% of $77,000)
Factory Labor Cost $15,400
These entries will properly assign the factory labor costs to production, considering the proportion of direct labor and indirect labor.