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Direct labor in COGS and Salary expense handling

Mar 27, 2017 at 11:05 PM


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What is the standard process in sap for handling direct labor?

As my understanding is that direct labor is part of COGS and is moved from Inventory to P&L at the time of GI. Hence will show as part of your COGS or expenses.

debit COGS

Credit Inventory.

Now when we have to pay the wages/salaries for those direct labor. Entries would

debit salary expense account

credit salaries payable

again putting your direct labor into your P&L under expenses.

Is this the correct process, as the process debit your expense account twice? Would your expense be over declared? I can't seem to figure out the accounting for this processs.

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