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

a. It is added to work in process as used.

b. It remains part of raw materials inventory.

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

d. It is transferred out of raw materials into work in process as used.

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.

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.