When Factory Wages Payable Costs for Labor Are Allocated in a Job

question 117

Multiple Choice

When Factory Wages Payable costs for labor are allocated in a job cost accounting system:

• A) Factory Wages Payable is debited and Work in Process Inventory is credited.
• B) Work in Process Inventory and Factory Overhead are debited and Factory Wages Payable is credited.
• C) Cost of Goods Manufactured is debited and Direct Labor is credited.
• D) Direct Labor and Indirect Labor are debited and Factory Wages Payable is credited.
• E) Work in Process Inventory is debited and Factory Overhead is credited.

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Definitions:

Effective Capacity

The capacity a firm can expect to achieve, given its product mix, methods of scheduling, maintenance, and standards of quality.

Operating Constraints

Limitations or restrictions that affect the performance or output of a process or system.

Maximum Output

The highest level of production that a company can sustain with the current resources and technologies.

Capacity

The throughput, or number of units a facility can hold, receive, store, or produce in a period of time.