FINANCIAL ACCOUNTING
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ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:**Cavy Company's Direct Labor Costs**
Cavy Company accumulated 570 hours of direct labor on Job 345 and 790 hours on Job 999. The direct labor was incurred at a rate of $18 per direct labor hour for Job 345 and $26 per direct labor hour for Job 999.
**Journal Entry Requirement**
Journalize the entry to record the flow of labor costs into production. If an amount box does not require an entry, leave it blank.
**Explanation:**
1. **Direct Labor Costs Calculation:**
- **Job 345:** 570 hours × $18/hour = $10,260
- **Job 999:** 790 hours × $26/hour = $20,540
2. **Journal Entry:**
- Debit "Work in Process Inventory" for the total direct labor costs.
- Credit "Wages Payable" or "Cash" for the same amount.
This entry reflects the allocation of labor costs to specific jobs, demonstrating an essential aspect of job order costing systems used in managerial accounting.
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