Question

When determining costs of jobs how does a compnay account for indirect materials?

Answer 1

Answer:

When determining costs of job, a company accounts for indirect materials as follow:

c. It is transferred out of raw materials into manufacturing overhead when used.

Explanation:

• Indirect materials are those materials which are used in smaller quantities in the production process that are not associated with a single or particular product or job. The indirect materials include tape, glue, oil, disposable things like tools, safety equipment etc.
• The option c is correct as when determining costs of job, indirect materials are transferred out of raw materials into manufacturing overhead (all indirect costs that are occurred during production process) when used.  
• The option a is not correct it is not added to work in process as used.
• The option b is also correct as it doesn't remain a part of raw materials inventory.
• The option d is also incorrect it is not transferred out of raw materials into work.

Answer 2

Answer:

c. It is transferred out of raw materials into manufacturing overhead when used.

Explanation:

Indirect materials are those that are necessary and that are used in the elaboration of a product, but are not easily identifiable or that do not merit control over them and are included as part of the indirect manufacturing costs as indirect materials.