Indirect materials are recorded in double-entry as which of the following?

Indirect materials are recorded in double-entry as which of the following?

• A. Dr Materials, Cr Overheads
• B. Dr Overheads, Cr Payables
• C. Dr Overheads, Cr Materials
• D. Dr SPL, Cr Materials

Answer: (C)

Indirect materials are costs that cannot be traced to a specific product, so they sit in manufacturing overheads. When these materials are issued to production, the cost is charged to overheads rather than directly to the product. The correct double-entry is to debit the overheads (increasing the overhead cost) and credit the materials (reducing the raw materials stock to reflect the material used). For example, if indirect materials of 500 are used, you record Dr Overheads 500; Cr Materials 500. The other options would either treat the cost as part of materials or misstate the flow (such as crediting a payable or unrelated account).

Indirect materials are costs that cannot be traced to a specific product, so they sit in manufacturing overheads. When these materials are issued to production, the cost is charged to overheads rather than directly to the product. The correct double-entry is to debit the overheads (increasing the overhead cost) and credit the materials (reducing the raw materials stock to reflect the material used). For example, if indirect materials of 500 are used, you record Dr Overheads 500; Cr Materials 500. The other options would either treat the cost as part of materials or misstate the flow (such as crediting a payable or unrelated account).