In a manufacturing environment,direct labor costs initially flow
A)into the Materials Inventory account.
B)into the Cost of Goods Sold account.
C)into the Work in Process Inventory account.
D)into the Finished Goods Inventory account.

Question

Quizplus · Accepted Answer

Direct labor costs are the wages paid to the workers who are directly involved in producing a product or service. As these workers complete their tasks, their time and costs are recorded in the Work in Process Inventory account, since they are directly contributing to the production of goods or services that are not yet complete. Once the products are finished, the costs are then transferred to the Finished Goods Inventory account, and ultimately to the Cost of Goods Sold account when the products are sold. The Materials Inventory account is used to record the costs of materials purchased and used in production. So, option A is incorrect, and options B and D are also incorrect, as direct labor costs do not flow directly into these accounts.

In a Manufacturing Environment,direct Labor Costs Initially Flow