During June, Buttrey Corporation incurred $67,000 of direct labor costs and $7,000 indirect labor costs. The journal entry to record the accrual of these wages would inclu a: debit to Work in Process of $74,000. credit to Work in Process of $67,000. debit to Work in Process of $67,000. credit to Work in Process of $74.000
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Direct labor costs are those labor costs that are incurred for the purpose of producing goods. For example wages paid to factory workers are direct labor costs.
Indirect labor costs are those labor costs that are incurred by a company but are not related to the production of a product.
Examples of direct labor costs are wages paid to factory workers, to quality control people etc. Examples of indirect labor costs are wages paid to maintenance personnel, janitors etc.
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