Answer E2-1

The gross earnings of the factor, workers for Vargas Company during the month of January are $66,000. The employer's payroll taxes for the factory payroll are $8,000. The fringe benefits to be paid by the employer on this payroll are $6,000. Of the total accumulated cost of factory labor, 85% is related to direct labor and 15% is attributable to indirect labor. (a) Prepare the entry to record the factory labor costs for the month of January. (b) Prepare the entry to assign factory labor to production. Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3, 500 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1, 500. During May, a summary of source documents reveals the following