Financial Accounting Concepts

What is Bin Card in Cost Accounting?

In cost accounting, bin cards are physical or electronic records used to track inventory levels in a stockroom, warehouse, or another storage facility.

The card typically contains the item’s stock number, description, location, current inventory level, and minimum and maximum levels that should be maintained.

Bin cards can be used to track inventory levels manually or electronically. In the manual system, a stock clerk or other designated employee physically inspects the inventory and updates the card accordingly. In the electronic system, sensors or other devices are used to track inventory levels and update the card automatically.

Benefits of Bin Cards

The main advantage of using bin cards is that they provide a real-time view of inventory levels, which can help to improve stock management and avoid stockouts. They can also help identify inventory usage patterns, which can be useful in planning future production or purchasing.

Another advantage of bin cards is that they can be used to trigger reordering when inventory levels reach a certain point. For example, if the minimum level of inventory is 10 units and the current level is 9 units, the bin card can be used to generate a purchase order for the 10th unit automatically.

The main disadvantage of bin cards is that they require ongoing maintenance and updates. If the card is not kept up-to-date, it can provide inaccurate information about inventory levels.

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