When the Actual Wage Rate Paid to Direct Labor Workers

question 3

Multiple Choice

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

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Definitions:

Overapplied Manufacturing Overhead

A situation where the amount of manufacturing overhead allocated to products is more than the actual overhead incurred.

Work in Process

Inventory that includes all materials, labor, and overhead costs incurred for products that are in the production process but not yet completed.

Debit Balance

An amount that reflects a surplus of debits over credits in an account, often indicating assets or expenses.

Raw Materials

Basic substances in their natural, modified, or semi-processed states, used as inputs in manufacturing or production.