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Use of Information Technology in Job Order Costing System:Learning objectives of the articles:
Bar code technology can be used to record labor time--reducing the drudgery in that task and increasing accuracy. Bar codes also have many other uses. In a company with a well-developed bar code system, the manufacturing cycle begins with the receipt of a customer's order in electronic form. Until very recently, the order would have been received via electronic data interchange (EDI), which involves a network of computers linking organizations. An EDI network allows companies to electronically exchange business documents and other information that extend into all areas of business activity from ordering raw materials to shipping completed goods. EDI was developed in the 1980s and requires significant investments in programming and networking hardware. Recently, EDI has been challenged by a far cheaper web-based alternative--XML (Extensible Markup Language), an extension of HTML (Hypertext Markup Language). HTML uses codes to tell your web browser how to display information on your screen, but the computer does not what the information is--it just displays it. XML provides additional tags that identify the kind of information that is being exchanged. For example, price data might be coded as <price>14.95<price>. When your computer reads this data and sees the tag <price> surrounding 14.95, your computer will immediately know that this is a price. XML tags can designate many different kinds of information--customer orders, medical records, bank statements, and so on--and the tags will indicate to your computer how to display, store, and retrieve the information. Office Depot is an early adopter of XML, which it is using to facilitate e-commerce with its big customers. Once an order has been received via EDI or over the web in the form of an XML file, the computer draws up a list of required raw materials and sends out electronic purchase orders to suppliers. When materials arrive at the company's plant from the suppliers, bar codes that have been applied by the suppliers are scanned to update inventory records and to trigger payment for the materials. The bar codes are scanned again when the materials are requisitioned for use in production. At that point, the computer credits the raw materials inventory account for the amount and type of goods requisitioned and charges the work in process inventory account. A unique bar code is assigned to each job. This bar code is scanned to update work in process records for labor and other costs incurred in the manufacturing process. When goods are completed, another scan is performed that transfers both the cost and quantity of goods from the work in process inventory account to the finished goods inventory account, or charges cost of goods sold for goods ready to be shipped. Goods ready to be shipped are packed into containers, which are coded with information that includes the customer number, the type and quantity of goods being shipped, and the order number. This bar code is then used for preparing billing information and for tracking the packed goods until placed on a carrier for shipment to the customer. Some customers require that the packed goods be bar coded with point-of-sale labels that can be scanned at retail check-out counters. These scans allow the retailer to update inventory records, verify price, and generate a customer receipt. In short bar code technology is being integrated into all areas of business activity. When combined with EDI or XML, it eliminates a lot of clerical drudgery and allows companies to capture and exchange more data and to analyze and report information much more quickly and completely and with less error than with manual system.
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