Measuring Direct Materials Cost in Job Order Costing System:

Learning objective of the article:

1. What is a materials requisition form. Give an example of materials requisition form.
2. What is a job cost sheet. Give an example of job cost sheet.
3. How direct materials cost is measured and recorded on a job cost sheet
   
   

Bill of Materials:

At the beginning of production process  a document known as bill of materials is used for standard products. "A bill of materials is a document that lists the type and quantity of each item of materials needed to complete a unit of standard product". In case where it is not possible to use a bill of materials, the production staff determines the materials requirements from the blueprints submitted by the customer.

Materials Requisition Form:

When an agreement is reached with the customer concerning the quantities, price and shipment date for the order, a production order is issued. The production department then prepares a materials requisition form. "The materials requisition form is a detailed source document that specifies the type and quantity of materials to be drawn from the storeroom, and identifies the job to which the costs of the materials are to be charged". The form is used to control the flow of materials into production and also for making entries in the accounting records. The completed form is presented to the storeroom clerk who then issues the necessary raw materials. The storeroom clerk is not allowed to release materials without such a form bearing an authorized signature. Following is an example of a materials requisition form.

Sample materials requisition form:

Materials Requisition Number14873      Job Number to Be Charged 2B47           Department Milling		Date March 2
Description	Quantity	Unit Cost	Total Cost
M46 Housing	2	$124	$248
G7 Connector	4	103	412
			-------
			$660
Authorized Signature Bill White

Job Cost Sheet:

After being notified that the production order has been issued, the Accounting Department prepares a job cost sheet. A job cost sheet is a form prepared for each separate job that records the materials, labor and overhead costs charged to the job. After direct materials are issued , the Accounting department records their costs directly on the job cost sheet.
In addition to serving as a means for charging costs to jobs,  the job cost sheet also serves as a key part of a firm's accounting records. The job cost sheets form a subsidiary ledger to the work in process (WIP) account. They are detailed records for the jobs in process that add up to the balance in the work in process (WIP). Following is an example of a job cost sheet.

Example of Job Cost Sheet

JOB COST SHEET
Job Number 2B47                        Department Milling                        Item                                               For Stock				Date Initiated March 2                   Date Completed                             Units Completed
Direct Materials		Direct Labor			Manufacturing Overhead
Req. No.	Amount	Ticket	Hours	Amount	Hours	Rate	Amount
14873	$660
Cost Summary					Units Shipped
Direct Materials			$		Date	Number	Balance
Direct Labor			$
Manufacturing Overhead			$
Total Cost			$
Unit Product Cost			$