Wilturner Company incurs $82,000 of labor related directly to the product in the

Question

Wilturner Company incurs $82,000 of labor related directly to the product in the Assembly Department, $31,000 of labor not directly related to the product but related to the Assembly Department as a whole, and $18,000 of labor for services that help production in both the Assembly and Finishing departments. The journal entries to record the labor would include:

Debit Work in Process Inventory $82,000; debit Factory Overhead $49,000.

Debit Work in Process Inventory $82,000; debit Wages Expense $49,000.

Debit Work in Process Inventory $113,000; debit Wages Expense $18,000.

Debit Work in Process Inventory $131,000.

Debit Work in Process Inventory $113,000; debit Factory Overhead $18,000.

Explanation / Answer

Debit Work in Process Inventory $113,000; debit Factory Overhead $18,000.

$82,000 of labor related directly to the product in the Assembly Department. So it is a direct cost associated to inventory.

Since, $31,000 of labor not directly related to the product but related to the Assembly Department as a whole . hence, it is an indirect cost that meance overhead.

$18,000 of labor for services that help production in both the Assembly and Finishing departments. Since, this cost is not associated with the product, but indirectlly incurred in making material to the final product. hence this cost is also part of indirect cost.

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