When the actual wage rate paid to direct labor workers exceeds the standard wage rate, the journal entry would include:
A)Credit to Wages Payable; Credit to Labor Rate Variance
B)Credit to Work-In-Process; Credit to Labor Rate Variance
C)Credit to Wages Payable; Debit to Labor Rate Variance
D)Credit to Work-In-Process; Debit to Labor Rate Variance

Question

Quizplus · Accepted Answer

When the actual wage rate paid to direct labor workers exceeds the standard wage rate, it results in a favorable variance called Labor Rate Variance. The wage payable account is credited to record the actual wages paid to the workers, and the Labor Rate Variance account is credited to record the favorable variance. Therefore, the journal entry will have a credit to wages payable and a debit to labor rate variance. Hence, option C is the correct choice.

When the Actual Wage Rate Paid to Direct Labor Workers