Measuring Direct Materials Cost in Job Order Costing System

Measuring Direct Materials Cost in Job Order Costing System:

Learning objective of this 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 of 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
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 materialsare 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 Number 2B47
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



You may also be interested in other useful articles from “job order costing system” chapter:

  1. Measuring Direct Materials Cost in Job Order Costing System
  2. Measuring Direct Labor Cost in Job Order Costing System
  3. Application of Manufacturing Overhead
  4. Job Order Costing System – The Flow of Costs
  5. Multiple Predetermined Overhead Rates
  6. Under-applied overhead and over-applied overhead calculation
  7. Disposition of any balance remaining in the manufacturing overhead account at the end of a period
  8. Predetermined Overhead Rate and Capacity
  9. Recording Non-manufacturing Costs
  10. Recording Cost of Goods Manufactured and Sold
  11. Job Order Costing in Services Companies
  12. Use of Information Technology in Job Order Costing
  13. Advantages and Disadvantages of Job Order Costing System
  14. Job Order Costing Discussion Questions and Answers
  15. Job Order Costing Exercises
  16. Case Studies

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