Account	Debit	Credit
Manufacturing overhead	$$$
Raw materials (indirect)		$$$
Labor cost (indirect)		$$$
Other indirect production costs		$$$

In this journal entry, raw materials and labor costs only include the indirect cost as the direct cost can be assigned to the work in process of the specific job directly. Other indirect production costs include utilities, insurance, depreciation, property tax, repairs and maintenance, etc.

Assign overhead costs to work in process

After determining the predetermined overhead rate, the company can make the journal entry to assign the overhead cost to work in process for a specific job as below:

Account	Debit	Credit
Work in process inventory	$$$
Manufacturing overhead		$$$

Problem 1.

For example, in January 2021, the manufacturing company ABC uses $1,500 of the indirect raw materials and $1,000 of indirect labor cost. Other indirect production costs, including depreciation, utilities, insurance, property tax, maintenance and repairs, have the total amount of $6,000.

The company ABC expects to incur the manufacturing overhead cost of $100,000 with the 20,000 machine hours for a whole year. And, in January 2021, Job A has used 1,600 machine hours.

What is the manufacturing overhead journal entry?

when assigning indirect costs to manufacturing overhead

when assigning overhead cost to work in process of Job A

Problem 2.

Assigning manufacturing overhead to work in process

With the information in the example above, the company ABC can determine the overhead rate as below:

Predetermined overhead rate = $100,000 / 20,000 hours = $5/hr

What would be the journal entry for manufacturing overhead to the work in process of Job A ?