XYZ Company has direct labor for the month of $40,000. XYZ's annual overhead is $600,000 and annual direct labor cost is $1,000,000. Overhead is applied based on direct labor. What is the entry to charge direct labor to production?
A) Debit Work-in-Process Inventory $40,000; credit Payroll Payable $40,000
B) Debit Manufacturing Overhead-Applied $40,000; credit Work-in-Process Inventory $40,000
C) Debit Work-in-Process Inventory $24,000; credit Manufacturing Overhead-Applied $24,000
D) Debit Work-in-Process Inventory $66,000; credit Manufacturing Overhead-Applied $66,000
Answer: A
Business
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