Question

Direct Labor Costs

During August, Hatch Company accumulated 610 hours of direct labor costs on Job 40 and 890 hours on Job 42. The total direct labor was incurred at a rate of $20 per direct labor hour for Job 40 and $25 per direct labor hour for Job 42.

Journalize the entry to record the flow of labor costs into production during August.

Answer 1

Direct labor used on Job 40 = 610

Direct labor used on Job 42 = 890

Direct labor rate for Job 40 = $20 per hour

Direct labor rate for Job 42 = $25 per hour

Direct labor cost incurred for Job 40 = Direct labor used on Job 40 x Direct labor rate for Job 40

= 610 x 20

= $12,200

Direct labor cost incurred for Job 42 = Direct labor used on Job 42 x Direct labor rate for Job 42

= 890 x 25

= $22,250

Total direct labor cost incurred = Direct labor cost incurred for Job 40 + Direct labor cost incurred for Job 42

= 12,200+22,250

= $34,450

General Journal	Debit	Credit
Work in process inventory	$34,450
Wages		$34,450
( To record the flow of labor cost)

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