The journal entry to record the cost of direct labor used in this period includes:
A) A debit to Work-In-Process Inventory of $2,880.
B) A debit to Work-In-Process Inventory of $2,560.
C) A credit to Direct Labor Rate Variance of $320.
D) A debit to Direct Labor Rate Variance of $360.

Question

Quizplus · Accepted Answer

The cost of direct labor used in the period is the total number of direct labor hours worked multiplied by the direct labor rate. In this case, that would be 320 hours x $8 per hour = $2,560. Since this cost is added to the work-in-process inventory, the journal entry would be a debit to Work-In-Process Inventory for $2,560. Choices A and C are incorrect because direct labor rate variance is a separate account used to track the difference between the actual direct labor rate and the budgeted direct labor rate. Choice D is incorrect because a variance account should have a credit balance, not a debit balance.

The Journal Entry to Record the Cost of Direct Labor