Material overhead application is essentially the same for Project Manufacturing, with one difference in the accounting transaction. The account debited is for the project cost group, rather than the organization, as in non-project average costing.
The accounting entry that follows applies to:
Material overhead on deliveries from receiving inspection
Complete assemblies from WIP
Receipt from Intransit (Standard or Project Org) into Project Org (FOB Receipt)
| Account | Debit | Credit |
|---|---|---|
| Cost group MOH account @ MOH cost | XX | - |
| Material overhead absorption account | - | XX |
Define material overhead subelements for projects in the same way as in non-project cost organizations. You can define as many material overhead subelements as desired and base their charging in a variety of ways: by item, activity, or lot, or based on total value.