Question

Georgina has opened a bow making business. They were commissioned to create bows for a birthday party. During this process of creating a product, Georgina is putting the raw materials into use. They have made the associated journal entry for the direct materials, but they are unsure what entry is made for the indirect materials?

Answer 1

Indirect materials are not directly traceable to the product being made. They are considered part of manufacturing overhead or indirect costs. The journal entry for indirect materials includes debiting the manufacturing overhead account and crediting the raw materials inventory account.

Step-by-step explanation:

When it comes to indirect materials, they are not directly traceable to the bows Georgina is making. Examples of indirect materials would include things like glue, packaging materials, or any other materials that are not directly incorporated into the bows but are essential in the production process. For accounting purposes, the indirect materials are considered as part of the manufacturing overhead or indirect costs. To record the use of indirect materials, Georgina would make an entry debiting the manufacturing overhead or indirect costs account and crediting the raw materials inventory account.