Item Master File Definition and Explained
In this video, you will see what an item master file is and why it is so useful. You’ll learn what kinds of information are contained in an item master file and how the information can be used.
Large corporations that make products will usually have an item master list. This list contains all the information they need to know for each item that the business has.
The item master list can contain supply items as well as finished product items.
Let’s take an example of a toy company to see how they use an item master list to help them run their business.
This is the company ABC. They make those miniature building blocks that snap together.
It comes in all kinds of colors and shapes. ABC Company uses an item master file to keep track of all the materials or supplies that go into making their bricks, as well as all the finished bricks that they have on hand.
This way, they know exactly how much material they have on hand to make more bricks and how many bricks they have to sell.
Each item on their item master file contains the following key bits of information:
1.Item name
2.Item type
3.Cost/Price
4.Location
5.Quantity
The item master file for the company ABC contains all the information they need to operate their business.
Each business is unique, so other businesses may have other key bits of information that they need to operate their business.
The purpose of the item master list is to keep a record of all the items that a company uses and has so that items can be purchased and/or made when they get used up.
It also keeps all their items organized so that when customers call to place orders, they can tell them exactly how many of each item they have on hand to ship out right away
For company ABC, they need to know the name of the item along with the item type, whether it is a supply item or a product item.
ABC also need to know how much the supply item costs or how much the product item is selling for.
The company also needs to know the location of the item and how much is left. The company has a table that contains all this information. Each item has its own line in the table.
For example, for the blue dye that is used to make their blue bricks, the company ABC has this line on its item master list.
This line tells the company that they have half a barrel left of the blue dye. They will need to purchase more pretty soon. The cost of dye is $10 a barrel.
The dye is located in Building A. Building A is where the blue bricks are made.
Let’s look at the line item for the blue bricks to see if more needs to be made.
Looking at this line, the company ABC sees that they have 10,000 of the blue bricks that are the 4 x 1 size.
The company sells this product for $0.30 per brick. All these bricks are located in Building A as well.
It looks like they still have a good quantity of these bricks. And, the company sells about 5,000 bricks per month, so the company can wait another month before making more.
Let’s review again the lesson summary.
An item master list contains all the information they need to know for each item that the business has.
The item master list contains key bits of information, such as:
Item name
Item type
The cost or price
Location
Quantity
The key information for each business can vary depending on the needs of the business. The purpose of the master list is to keep a record of all the items that a company uses and has so that items can be purchased and/or made when they get used up.
what is the Learning Outcome for this video?
This video is to assist your company to understand the Item Master File Definition and Explained and provide some examples of key pieces of information it would contain.