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Chapter 4: Problem 6
Describe three major source documents used in job-costing systems.
Short Answer
Expert verified
The three major source documents used in job-costing systems are the job cost sheet, materials requisition form, and time ticket. The job cost sheet records and accumulates all costs related to a specific job, while the materials requisition form tracks the issuance of raw materials for each job. The time ticket is used to record labor hours spent on specific jobs. These documents are crucial for accurate cost allocation, tracking materials and labor costs, and making informed management decisions.
Step by step solution
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1. Job Cost Sheet
The job cost sheet is a primary document used in job-costing systems to record and accumulate all costs related to a specific job or project. It serves as the central collection point for all cost information and is used to track direct materials, direct labor, and manufacturing overhead costs for each job. The job cost sheet provides a detailed breakdown of the costs incurred, helps in monitoring the progress of the job, and is used for billing purposes.
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2. Materials Requisition Form
The materials requisition form is a document used to request and record the issuance of raw materials or components required for a specific job or project. The form indicates the job number, date of issue, and the quantity and description of the materials. It serves several purposes: authorizing the release of materials from the storeroom or warehouse, tracking the consumption of materials for a specific job, providing a basis for charging the costs of materials to the job cost sheet, and updating the inventory records.
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3. Time Ticket
The time ticket is a document used to record the labor hours spent by employees on specific jobs or tasks within a job-costing system. Employees complete time tickets on a daily or weekly basis, indicating the hours worked, job number, and description of the tasks performed. Time tickets are important for several reasons. First, they provide a basis for allocating labor costs to the appropriate job cost sheet. Second, they help management monitor labor efficiency and productivity for each job. Finally, time tickets can be used as input to the payroll system for preparing employee paychecks.In conclusion, the three major source documents used in job-costing systems are essential for accurate cost allocation and tracking of materials, labor, and overhead costs. These documents play a significant role in making informed decisions for management, estimating job costs, and monitoring the overall efficiency and productivity of a company's operations.
Key Concepts
These are the key concepts you need to understand to accurately answer the question.
Understanding the Job Cost Sheet
The job cost sheet lies at the heart of effective job-costing systems, functioning as the anchor for tracking job expenses. Think of it as the biography for each specific job, meticulously chronicling every material, hour of labor, and bit of overhead allocated. When you set eyes on a job cost sheet, you'll notice sections dedicated to various expenses. For direct materials, a job cost sheet will list types, quantities, and total costs, integrating information from materials requisition forms—a vital link ensuring materials are traced to each job.
The labor section reveals the workforce's contribution, with hours worked and rates paid, directly citing data from time tickets. Lastly, manufacturing overhead, albeit more indirect, is systematically applied to the job based on a predetermined rate or allocation method. Accountants turn to the job cost sheet for preparing detailed invoices, as it exemplifies what the client is being billed for. Also, managers lean on these sheets for internal insights, helping to compare estimated costs versus actuals and spotting areas where efficiency gains are waiting to be unlocked.
Decoding the Materials Requisition Form
A materials requisition form acts as the formal request ticket for materials needed on the shop floor. When the production team gets ready to start a job, they can't just grab supplies off the shelf without a trace. The materials requisition form bridges inventory management and job costing by detailing what's taken, who took it, and where it's going to be used.
Let's unlock the form's components. It typically features the job number—a unique identifier tying materials to their specific job. Quantity and description on the form ensure that both the correct amount and the correct items are issued, while the date of issue stamps the transaction in time. As materials are drawn from the storeroom, these forms update inventory records, maintaining data integrity. The costs of these materials slip into the job cost sheet, painting a fuller financial picture for each project or job. Without effective use of materials requisition forms, it's like navigating without a map—you may end up somewhere valuable, but the chances of getting lost along the way are high.
The Role of Time Tickets in Job-Costing
When we talk about tracking costs within a job-costing system, we cannot ignore the influence of time tickets. They are essentially time logs that capture the work narrative of employees. Imagine clocking in and clocking out, but with fathomless detail—each tick of the clock tells a story of what job was done, how long it took, and by whom.
Time tickets are curated daily or weekly and are the supporting cast to the starring job cost sheet. They help ensure labor costs are not just accounted for, but accurately pinned to the specific job they relate to. In essence, time tickets are pivotal for labor cost control and analysis. They feed into payroll processing—ensuring employees are paid fairly for the specific job they've toiled over—and they also serve as a measure of productivity. Management relies on these tickets to gauge if certain jobs are hogging more labor than expected, allowing for proactive adjustments. Employee performance evaluation can also get a boost from these detailed records, incenting efficiency, and pinpointing training needs.
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