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.

Bin cards help maintain accurate records of stock quantities by providing a clear breakdown of products received, issued, and remaining. This reduces the chances of errors or miscounts compared to relying solely on manual counting methods.

By maintaining careful records of stock levels on bin cards, it becomes easier to identify when items need to be replenished. When the quantity mentioned on the card reaches a certain reorder point or minimum threshold level, it serves as a trigger for placing new orders in time.

For new employees who need to become familiar with product locations and inventory management methods, bin cards are a great teaching tool. Bin cards’ straightforward and organised design makes learning easier, shortening training time, and increasing accuracy.

Disadvantages of Bin Cards

1. Inaccuracy: Bin cards rely heavily on manual input, making them vulnerable to human error. If data is not updated correctly or regularly, inaccurate information can lead to discrepancies between the physical stock and the recorded stock on the card.

2. Time-consuming: Maintaining bin cards can be a time-consuming task, especially for businesses with large inventories or rapid turnover rates. Regularly updating and reconciling information on multiple bin cards can be challenging and may require significant resources.

3. Limited accessibility: Physical bin cards are typically located within specific storage areas. This limited accessibility can create delays in obtaining up-to-date information on product availability, especially for teams working remotely or across different locations.

4. Lack of real-time updates: Only when manually updated, do bin cards often give the most recent information regarding stock levels. Delays in a shortfall or surplus detection may arise, which could affect order fulfilment and customer satisfaction levels.

5. Lack of integration with modern systems: Bin cards may eventually lose importance as more companies switch to digital inventory management systems and automation solutions. Due to the manual nature of information updates and reconciliation, integrating bin card data with these contemporary systems can be difficult and ineffective.


Bin cards can be helpful in certain circumstances and for smaller organisations with lower inventory requirements, but these drawbacks show the shortcomings of primarily depending on manual record-keeping techniques. Businesses frequently combine bin card systems with digital inventory management programmes that provide real-time updates, automation, and sophisticated reporting tools in order to offset these drawbacks.

Show More

Leave a Reply