Question

In the basic flow of inventory through a manufacturing system, which of the following occurs third in the job costing system?

1) Material requisition
2) Labor time record
3) Overhead allocation
4) Job cost sheet

Answer 1

The third step in the job costing system for inventory flow in manufacturing is overhead allocation. It follows the material requisition and labor time record, and comes before the preparation of the job cost sheet. Optimal production technologies, such as utilizing less labor and more machinery, can contribute to lower total costs and increased efficiency.

Step-by-step explanation:

In the basic flow of inventory through a manufacturing system, the third step in the job costing system is overhead allocation. The process typically follows this sequence:

1. Material requisition is when materials are requested and released from the storeroom for use in production.
2. Labor time record is where the hours worked by employees on a specific job are recorded.
3. Overhead allocation, the third step, involves assigning manufacturing overhead costs to individual jobs based on a predetermined rate.
4. Finally, the job cost sheet is prepared, compiling all the costs—materials, labor, and overhead—to determine the total cost of the job.

Understanding each step and knowing how to manage costs efficiently are crucial to minimizing expenses and maximizing profits. Technologies like production technology 3, which utilizes less labor and more machinery, can lead to a shift toward automation, particularly when machine hours are cheaper than labor. This is in line with businesses continuously seeking ways to optimize their production process and reduce total costs.