Question

During May, Bergan Company accumulated 2,500 hours of direct labor costs on Job 200 and 3,000 hours on Job 305. The total direct labor was incurred at a rate of $28 per direct labor hour for Job 200 and $24 per direct labor hour for Job 305. Journalize the entry to record the flow of labor costs into production during May.

Answer 1

The Journal entry is as follows:

Work In Progress A/c Dr. $142,000

To wages payable $142,000

(To record the flow of labor costs into production)

Note :

1. Total Labor Cost for Job 200 = Labor Hours × Direct labor rate

= 2,500 × $ 28

= $ 70,000

2. Total Labor Cost for Job 305 = Labor Hours × Direct labor rate

= 3,000 × $ 24

= $ 72,000

3. Labor Cost = $ 70,000 + $ 72,000

= $ 142,000