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Question 6 of 13 < -/1 View Policies Current Attempt in Progress The gross earnings of the factory workers for Bonita Company during the month of January are $81,000. Of the total accumulated cost of factory labor, 81% is related to direct labor and 19% is attributable to indirect labor. (a) (b) Record the factory labor costs for the month of January. Assign factory labor to production. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Raw Materials Inventory Manufacturing Costs Factory Labor Manufacturing Overhead Work in Process Inventory $ $ $ $ $ Incurred factory (a) labor Direct (b) labor Indirect (b) labor $ $ $ $ Balance e Textbook and Media Assistance Used Save for Later Attempts: 0 of 3 used Submit Answer

Answer 1

a) Incurred factory labor b) Direct labor b) Indirect labor Totals Manufacturing Costs WIP RM Inventory Factory Labor Mfg. Overhead Inventory $0 $81,000 $0 $0 $0 $65,610 $0 $65,610 $0 $15,390 $15,390 $0 $0 $0 $15,390 $65,610 FG Inventory $0 $0 $0 $0 Cost of Goods Sold $0 $0 $0 $0 [$81000 x 81%] [$81000 x 19%] Explanation: Product costs are those costs which are incurred at the factory level during production process which may be direct or indirect costs. Of which, variable product costs will change when production volume increases or decreases whereas fixed product costs do not change, unless there are some conditions that have the capability to decrease or cause to increase the same. Product cost is nothing but the manufacturing cost which include direct materials, direct labor, variable & fixed mfg. overheads. Direct materials and direct labor costs shall be charged to Work-in- Process inventory whereas indirect materials and indirect labor costs shall be charged to manufacturing overhead. When factory labor cost is recorded initially, Factory labor cost will be charged with full amount of labor cost. Later on, when labor cost is charged to production, its balance will be decreased and applicable accounts' such as work-in-process or mfg. overhead balance will be increased.