Various types of production labor, such as production management salaries and materials management wages, are also routed through an overhead cost pool, from which they are later allocated to inventory. The allocation to a cost pool may occur later, but we will assume it occurs at the time of initial accounts payable recordation, with this entry: These expenditures typically begin as accounts payable and are allocated to an overhead cost pool, from which they are then allocated to inventory and the cost of goods sold. There are other types of production-related expenses that are allocated to inventory, such as rent, utilities, and supplies for the manufacturing operation. Record Indirect Production Costs in Overhead
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