What Is a Material Ledger?

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  • Written By: Osmand Vitez
  • Edited By: PJP Schroeder
  • Last Modified Date: 14 September 2019
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A manufacturing company has three main components to track during production processes: materials, labor, and overhead. Cost accountants use different accounting books — journals or ledgers — to track the costs associated with any production activity. A material ledger retains all transactions that relate to the purchase and use of materials for producing goods. Any use or movement of materials has an entry in this ledger whether the company uses a job order or process costing system. A material ledger is of great importance to a manufacturing business.

A material ledger may have several subledgers or journals. This provides a more in-depth approach to the recording and reporting of financial figures relating to production activities. A few common subledgers may be accounts payable, different journals for the types of materials used in production, and similar accounting books. The main ledger contains only the aggregate information for various transactions, making the book more concise when reviewing numbers. Cost accountants are responsible for maintaining all ledgers and subledgers in this accounting process.


Direct materials are the only items or transactions recorded in a material ledger. Items have the classification of direct materials when the resource is absolutely necessary for producing a product. For example, steel widgets require steel as the main production material. Any purchases or uses of steel from the company’s materials inventory have representation in the material ledger. Again, subledgers may be necessary if a company requires several types of direct materials to produce a good.

Several ledgers and financial accounts make up a company’s cost accounting system. Along with a direct material ledger, accountants may use ledgers to record the direct labor for producing goods and the overhead — indirect costs not traceable to a single good. All of these individual accounts flow into the work-in-process (WIP) account in the cost accounting system. The WIP account indicates the cost of each resource currently used in producing goods. Therefore, an entry will have representation in at least two ledgers, such as the material ledger and the WIP ledger, for example.

The purpose of ledgers is to keep tabs on the cost of materials used when producing goods. All batches or processing of goods incur some types of costs. Cost accountants need this information in order to allocate production costs to all goods in the manufacturing process. This allows a company to assess how efficiently it uses materials to produce items.


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