I am looking to confirm how other manufacturers set up their GL controls for overhead and applied OH.
In my structure, when an employee punches into a job, WIP OH (balance sheet acct) gets debited and applied OH (P&L account) gets credited. When we recognize revenue/costs WIP OH gets a credit and Overhead (P&L acct) gets a DB. All OH expenses otherwise recorded hits the P&L when incurred (rent, utilities, etc)
This is my first time working with an ERP system that manages this flow. I am not 100% sure this is correct and looking for other viewpoints into this.
That is how we have our GL controls set up, with the only difference being that we produce parts into inventory and ship them from inventory. When parts are received to inventory, that credits WIP burden (BS acct) and debits Inventory (BS acct). When they are shipped, Inventory is credited and COGS Burden (P&L) is debited.
On the P&L, we have Applied Burden, COGS Burden, and the various accounts that make up our overhead grouped together so we can compare the overhead we captured in COGS vs our actual overhead costs incurred.