How Do you Assign Direct Materials and Labor Costs to Jobs?The job cost sheet reports manufacturing costs for each job. It also serves as a subsidiary ledger for the work-in-process inventory account. Show
Two primary documents track the assignment of material and labor to a Job Cost Sheet:
To record the cost of raw materials purchased, debit the raw materials inventory account and crediting either accounts payable or cash. To record hours worked, debit the salaries and payroll and credit cash. What Accounts are Used in Job Costing?There are also minor differences in the accounts that are used by manufacturing organizations and service organizations. Accounts Used in Service Organizations and Manufacturing Organizations
Some service companies do not use a work-in-process account but instead simply charge costs directly to expense accounts. Service organizations use a job cost sheet like the one discussed earlier to track direct materials, direct labor, and overhead. How to Assign Direct Material Costs to JobsThe materials requisition form specifies the type, quantity, and cost of materials requested for production and the job in which the materials will be used. The work-in-process inventory account tracks manufacturing costs in total. You will use s separate subsidiary ledger to track manufacturing costs for each job. The work in progress inventory subsidiary ledger will consist of individual job cost sheets - one for each job. To record the raw materials purchased, the raw materials inventory account is credited. Then, the work-in-progress inventory account is debited. Then, post the information shown on the materials requisition form to the appropriate job cost sheet. How do service organizations track direct materials using job costing?Direct materials are often negligible in a service organization. Thus, many service organizations do not track direct materials for each job. If, however, the direct materials are significant, service organizations track the direct materials for each job. The process of recording this information in the journal and job cost sheet is exactly the same as for a manufacturing company. How to Assign Direct Labor Costs to JobsDirect labor refers to the time spent by workers to convert materials into a finished product. Assigning direct labor means assigning this time to a product or job. Note: This process is carried out primarily in manufacturing companies. Worker hours, date, and job number are tracked on a time sheet (also known as a time card, time ticket, or job ticket. Next, use this information debit the Work-in-Process account and credit the Salaries and Wages Payable account. Next, post the information shown on the timesheet to the specific job cost sheet. How do service organizations track direct labor using job costing?Direct labor tends to be the most significant cost for service organizations. The process of tracking labor using a timesheet and recording labor costs in the journal and job cost sheet is exactly the same as for a manufacturing company. Related Topics
Which account is debited when direct labor is recorded?The journal entry to record the total direct labor is to debit the Work-in-Process account and credit the Salaries and Wages Payable account.
Is direct labor work in process?Cost of production
Direct labor: The workers who actually work with and process the different materials manually or with the aid of machines are known as “direct labor” or “productive labor.” The nature of duties is such that their wages can be directly charged to the job they are manufacturing.
In which account is the cost of direct labor initially recorded?Direct labor costs are recorded initially in an inventory account.
Which account is debited when direct materials and direct labor are added to the jobs?Direct material and direct labor costs are debited to the Work In Process account. Any indirect material or indirect labor costs are debited to the Manufacturing Overhead control account, along with any other actual manufacturing overhead costs incurred during the period.
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