Definition: A materials ledger card is a report used in a job order cost system to track and record the number of units that are purchased and issued to the production line. In other words, this is a file that keeps track of how many units of raw materials are ordered from vendors, how many units are in storage, and how many have been transferred to the production line.
What Does Materials Ledger Card Mean?
The materials ledger card is just as much a managerial accounting tool as it is a loss prevention safeguard. Managers need to keep track of how many times they need to order stock and raw materials for the production process. They also need to make sure that all of the materials are properly getting to the production facility on time without having anyone steal them.
Example
A manager can also compare the receiving report with the materials ledger card to make sure there wasn’t any shrinkage in the process.
It’s important to note that the ledger cards are perpetual documents used in job order costing systems. They are updated every time something is purchased and every time something is requested from the production line. These cards in essence keep a real time record of when raw materials were purchased, received, and transferred to the assembly line or production room floor.
Different just-in-time systems don’t necessarily use these during the manufacturing process.
Even though it’s called a card, most companies use rarely keep manual cost accounting systems anymore. Even smaller companies have switched to using a computerized card system.
