Colfax Company incurred production labor costs of $5,400 in February (payable in March)for work requiring 1,100 standard hours at a standard rate of $15 per hour;1,200 actual direct labor hours were worked.Based on this information,which one of the following would be included in the journal entry to record the labor costs?
A)$16,500 credit to Work-in-process Inventory.
B)$1,500 credit to Labor Efficiency Variance.
C)$16,200 credit to Wages Payable.
D)$1,500 credit to Labor Rate Variance.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

The labor costs incurred are $5,400 for 1,100 standard hours, which gives a standard rate of $5 per hour ($5,400/1,100). However, 1,200 actual hours were worked, so the total labor cost is $7,200 (1,200 actual hours x $6 standard rate). This labor cost is payable in March and should be recorded with a credit to Wages Payable. Therefore, the correct choice is C, $16,200 credit to Wages Payable. The other options are not relevant to this scenario.

Colfax Company Incurred Production Labor Costs of $5,400 in February