Asked by Camille Esselin on Apr 24, 2024
Kita Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: 
During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 24,820 hours at an average cost of $21.20 per hour.Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation.
When recording the direct labor costs, the Cash account will increase (decrease) by:
A) ($514,960)
B) ($526,184)
C) $526,184
D) $514,960
Direct Labor
Workers who are directly involved in the manufacturing of products or provision of services, whose wages are directly tied to the production process.
Work in Process
Inventory consisting of materials and labor that are partially through the manufacturing process but not yet complete.
- Gain an understanding of the essential principles and arithmetic involved in a standard costing system.
- Become familiar with the technique for logging transactions in a standard cost system that does not account for variable manufacturing overhead.
- Assess the variations in direct materials, direct labor, and manufacturing overhead.
Learning Objectives
- Gain an understanding of the essential principles and arithmetic involved in a standard costing system.
- Become familiar with the technique for logging transactions in a standard cost system that does not account for variable manufacturing overhead.
- Assess the variations in direct materials, direct labor, and manufacturing overhead.