Final answer:
Companies assign raw material costs to jobs by debiting the Work in Process Inventory and crediting the Raw Materials Inventory. Although FIFO, LIFO, or average-cost methods are used for inventory valuation, the actual costs of materials are assigned as they move from inventory to being used in production. The correct option is b. Based on a predetermined rate.
Step-by-step explanation:
Companies assign raw material costs to jobs using various methods. However, the correct way to assign the costs of raw materials to jobs in a job order costing system is by debiting Work in Process (WIP) Inventory and crediting Raw Materials Inventory. It is important to note that although companies can use any inventory costing method such as FIFO, LIFO, or average cost to value their inventory, the assignments to individual jobs should always debit the WIP account to reflect that the goods are now in production and credit the Raw Materials Inventory to indicate the materials have left the storeroom.
When thinking about natural resources or raw materials as factors of production, in the context of economics, these would include all inputs used to produce goods and services. For example, in a pizza restaurant, raw materials would include flour, yeast, tomatoes, herbs, and cheese. The various methods of valuation, such as FIFO (first-in, first-out), LIFO (last-in, first-out), or average-cost methods, are used to determine the cost of materials used in production. However, to assign costs to specific jobs or orders, companies will use the actual costs of the materials as they move from inventory to WIP.