Information technology gives managers quick and accurate job-costing information, making it easier for them to manage and control jobs. Consider, for example, the direct materials charged to jobs. Managers control these costs as materials are purchased and used. Using Electronic Data Interchange (EDI) technology, companies like Robinson order materials from their suppliers by clicking a few keys on a computer keyboard. EDI, an electronic computer link between a company and its suppliers, ensures that the order is transmitted quickly and accurately with minimal paperwork and costs. A bar code scanner records the receipt of incoming materials, and a computer matches the receipt with the order, arranges for payment to the supplier, and records the materials received. When an operator on the production floor transmits a request for materials via a computer terminal, the computer prepares a materials-requisition record, instantly recording the issue of materials in the materials and job-cost records. Each day, the computer sums the materials-requisition records charged to a particular job or manufacturing department. A performance report is then prepared monitoring the actual costs of direct materials. The use of direct materials can be reported hourly if managers believe the benefits exceed the cost of such frequent reporting.
Similarly, information about direct manufacturing labor is obtained as employees log into computer terminals and key in job numbers, their employee numbers, and the start and end times of their work on different jobs. The computer automatically prints the labor time record and, using hourly rates stored for each employee, calculates the direct manufacturing labor costs of individual jobs. Information technology can also give managers instant feedback to help them control manufacturing overhead costs, jobs in process, jobs completed, and jobs shipped and installed at customer sites.