Job Order Costing
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
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