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question how would the cost be recorded in the cost ledger if the direct costs in manufacturing company are 95000
sir options are
a) debit work in progress 95000, credit wages and salaries 95000
b) debit wages and salaries 95000, credit bank 95000sir, I know the other two options can’t be. I am having doubt why it’s not b why it is an option a
why we have to debit work in progress is it because of the manufacturing company. please explainalso, production workers overtime premium due to general pressures are considered indirect. is it because of the word general pressure
When wages are paid, they will be debited to the wages account.
Those wages that are direct costs will then be transferred to the work in progress account (debit work in progress and credit wages). (Other none direct pages will be transferred to the overheads account)
All overtime is treated as an indirect cost (regardless of the reason given) unless it is at the specific request of a customer in which case it is a direct cost.
Okay, so basically the questions say that direct costs have been already paid we just need to record the second part which is transferring the direct cost to the work in progress account?
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