Question

What is the usage of direct and indirect (OH) materials into production JE?

1) To calculate the total cost of production
2) To determine the cost of direct materials used in production
3) To allocate the overhead costs to the production units
4) To track the inventory of indirect materials used in production

Answer 1

The usage of direct and indirect materials in production JE serves multiple purposes. It helps calculate the total cost of production, determines the cost of direct materials used, allocates overhead costs, and tracks the inventory of indirect materials.

Step-by-step explanation:

The usage of direct and indirect materials in production JE serves several purposes:

1. To calculate the total cost of production: Direct and indirect materials are included in the production JE to determine the overall cost of producing the goods or services.
2. To determine the cost of direct materials used in production: Direct materials, which are materials that can be specifically traced to the final product, are included in the production JE to track their cost.
3. To allocate the overhead costs to the production units: Overhead costs, such as utilities and maintenance, are often indirectly related to the production process. They are allocated to the production units based on a predetermined method.
4. To track the inventory of indirect materials used in production: Indirect materials, such as lubricants or cleaning supplies, are included in the production JE to track their usage and ensure proper inventory management.