Job Order Costing

Only available on StudyMode
  • Download(s) : 250
  • Published : May 9, 2013
Open Document
Text Preview
Chapter 3
Systems Design: Job-Order Costing

Types of Costing Systems Used to Determine Product Costs

Process Costing
Chapter 4 Chapter 4

Job-order Costing

Many different products are produced each period. Many different products are produced each period. Products are manufactured to order. Products are manufactured to order. Cost are traced or allocated to jobs. Cost are traced or allocated to jobs. Cost records must be maintained for each distinct Cost records must be maintained for each distinct product or job. product or job.

Types of Costing Systems Used to Determine Product Costs

Process Costing

Job-order Costing

Typical job order cost applications: Typical job order cost applications: Special-order printing Special-order printing Building construction Building construction Also used in the service industry Also used in the service industry Hospitals Hospitals Law firms Law firms

Quick Check
Which of the following companies would Which of the following companies would be likely to use job-order costing rather be likely to use job-order costing rather than process costing? than process costing? a. Scott Paper Company for kleenex. a. Scott Paper Company for kleenex. b. Architects. b. Architects. c. Heinz for ketchup. c. Heinz for ketchup. d. Caterer for a wedding reception. d. Caterer for a wedding reception. e. Builder of commercial fishing vessels. e. Builder of commercial fishing vessels.

Job-Order Costing
Manufacturing Manufacturing overhead (OH) overhead (OH) Applied to each Applied to each job using a job using a predetermined predetermined rate rate

Direct Direct material material

Tra ced dire to e ctly ach job

The Job The Job
Direct Direct labor labor
y ectl dir d b ac e Tr h jo eac to

Sequence of Events in a JobOrder Costing System
Receive Receive orders from orders from customers customers Begin Begin production production

Schedule Schedule jobs jobs

Order Order materials materials

Sequence of Events in a JobOrder Costing System
Direct Materials Direct Materials Job No. 1 Job No. 1 Direct Labor Direct Labor Job No. 2 Job No. 2 Job No. 3 Job No. 3

Manufacturing Manufacturing Overhead Overhead

Charge Charge direct direct material and material and direct labor direct labor costs to costs to each job as each job as work is work is performed. performed.

Sequence of Events in a JobOrder Costing System
Direct Materials Direct Materials Job No. 1 Job No. 1 Direct Labor Direct Labor Job No. 2 Job No. 2 Job No. 3 Job No. 3

Manufacturing Manufacturing Overhead Overhead

Apply Apply overhead to overhead to each job each job using a using a predeterpredetermined rate. mined rate.

Job-Order Cost Accounting
The primary document for tracking the costs associated with a given job is the job cost sheet.

Let’s investigate

Job-Order Cost Accounting
PearCo Job Cost Sheet Job Number A - 143 Department B3 Item Wooden cargo crate Date Initiated 3-4-01 Date Completed Units Completed

Direct Materials Direct Labor Manufacturing Overhead Req. No. Amount Ticket Hours Amount Hours Rate Amount

Cost Summary Direct Materials Direct Labor Manufacturing Overhead Total Cost Unit Product Cost

Units Shipped Date Number Balance

Job-Order Cost Accounting
PearCo Job Cost Sheet Job Number A - 143 Department B3 Item Wooden cargo crate Direct Materials Req. No. Amount Date Initiated 3-4-01 Date Completed Units Completed

A materials requisition form Manufacturingto is used Overhead Direct Labor Ticket Hours Amount Hours authorize the Rate Amount use of materials on a job. Let’s see one
Units Shipped Date Number Balance

Cost Summary Direct Materials Direct Labor Manufacturing Overhead Total Cost Unit Product Cost

Materials Requisition Form
PearCo Materials Requisition Form Requisition No. X7 - 6890 Job No. A - 143 Department B3 Description 2 x 4, 12 feet 1 x 6, 12 feet Quantity 12 20 Date 3-4-01

$

Unit Cost 3.00 4.00

Total Cost $...
tracking img