When recording the direct labor costs in transaction (c) above, the Cash account will increase (decrease) by:

A) $458,896
B) $475,080
C) ($458,896)
D) ($475,080)

Question

When recording the direct labor costs in transaction (c) above, the Cash account will increase (decrease) by:A) $458,896B) $475,080C) ($458,896)D) ($475,080)

kaylin rumde · Accepted Answer

Final Answer : C, Explanation :  The question states that direct labor costs were incurred, which means cash was likely paid out for wages. Since direct labor costs are a product cost, they are part of the cost of goods sold and must be debited to the inventory account (as per transaction c). Therefore, cash must be credited in the same amount to balance the transaction. Choice C indicates a decrease in cash, which is correct as cash is being paid out for wages. Cash decreases by the actual amount paid to direct laborers, which is AH × AR = 26,680 hours × $17.20 per hour = $458,896.

When recording the direct labor costs in transaction (c) above, the Cash account will increase (decrease) by:

A) $458,896
B) $475,080
C) ($458,896)
D) ($475,080)

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Learning Objectives

Learning Objectives

Related questions

When recording the direct labor costs in transaction (c) above, the Cash account will increase (decrease) by:A) $458,896B) $475,080C) ($458,896) D) ($475,080)

Definitions

Learning Objectives

Learning Objectives

Related questions

When recording the direct labor costs in transaction (c) above, the Cash account will increase (decrease) by:

A) $458,896
B) $475,080
C) ($458,896)
D) ($475,080)