Tracing Costs: Videos & Practice Problems
Tracing Direct Materials Cost to a Job
Tracing Direct Materials Cost to a Job
Prisca’s Printing Co. needs to take specialty glitter ink out of their inventory to use on their next job order. When they take the glitter ink out of their inventory, which document would they use to track the cost of glitter ink to job the glitter ink is being used for?
Bill of Materials.
Materials Requisition Form.
Raw Materials Record.
General Journal.
Tracing Direct Labor Cost to a Job
Tracing Direct Labor Cost to a Job
At what stage in the production process are time ticket traced?
Raw Materials Inventory.
Work in Process.
Finished Goods.
Costs of Good Sold.
Here's what students ask on this topic:
The bill of materials plays a crucial role in tracing costs in job order costing by listing all the raw materials needed to complete a specific job. It acts like a recipe, detailing the parts, descriptions, and quantities required for the job. This document helps identify what materials are necessary but does not assign any cost values. It also includes the job number, which is essential for tracking costs across different documents. By knowing exactly what materials are needed, companies can ensure accurate cost tracing from the start of the production process.
The materials requisition form records all materials taken from the storeroom to be used on a specific job. Unlike the bill of materials, it includes the cost of the materials, which allows companies to assign direct material costs to the correct job number. Since materials are often withdrawn in multiple batches throughout production, each requisition form has a unique requisition number linked to the job number. This helps track inventory usage and costs accurately as materials leave storage and are applied to the job.
The raw materials record tracks the stock and movement of each raw material item listed on the bill of materials. It records purchases, requisitions, and the remaining inventory for each material. For example, it shows when materials were bought, how many units were requested for a job, and the cost associated with those units. This detailed tracking ensures that companies maintain accurate inventory levels and can verify the costs assigned to each job, supporting precise cost tracing in job order costing.
Direct labor cost is traced to a specific job using a time ticket, which records the hours an employee works on various jobs during a day. The time ticket includes the employee's name, hourly wage, job numbers worked on, hours spent on each job, and the resulting labor cost. Since employees may work on multiple jobs, the time ticket helps allocate labor costs accurately to each job. Multiple time tickets from different employees over time are accumulated to determine the total direct labor cost for a job.
Multiple materials requisition forms are used for a single job because materials are often needed at different stages of production rather than all at once. For example, in building a house, certain materials like toilets or windows are only required later in the process. Each requisition form records the materials taken out at a specific time, linking them to the job number and tracking their costs. This staged approach allows for more accurate inventory management and cost tracing throughout the job's production timeline.
