Question

Wilturner Company incurs $94,000 of labor related directly to the product in the Assembly Department, $43,000 of labor related to the Assembly Department as a whole, and $30,000 of labor for services that help production in both the Assembly and Finishing departments. The journal entries to record the labor for the Assembly Department would include:

Answer 1

Debit Work in Process Inventory $137,000; debit Factory Overhead $30,000.

Step-by-step explanation:

Work in process inventory includes direct labor = $94,000 + $43,000, while factory overhead includes indirect labor = $30,000.

Direct labor refers to the labor costs directly associated with the production processes, while indirect labor include all other labor costs that are not directly related to the production of goods, e.g. supporting activities, maintenance, administrative, etc.