Final answer:
The statement is false as the journal entry to record direct labor usage includes a debit to WIP - Processing Department #1, not a credit. The credit side would reflect the source of labor costs, such as Salaries and Wages Payable.
Step-by-step explanation:
The journal entry to record the use of direct labor in Processing Department #1 would include a debit to Work In Process (WIP) - Processing Department #1 and a credit to Labor Expense or Salaries and Wages Payable, depending on whether the labor has been paid yet. Therefore, the statement that a credit would be made to WIP - Processing Department #1 is False.
When direct labor is utilized in a department, the cost is added to the Work In Process account for that department because it represents the labor costs attributable to the goods still in production. Instead of crediting WIP, you would credit the source of the labor cost, such as the Salaries and Wages Payable account if labor is not yet paid or Labor Expense if it's been paid. The WIP account is debited to reflect the increase in production costs.