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  • Job Order Costing

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    Dahlia Blooms
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    A cost system is designed by a firm to monitor and aggregate costs incurred to provide cost accounting information to managerial decision-makers. It comprises forms, processes, controls, and reports to report product and service costs for profitability analysis, inventory valuation and cost control. Job order costing is an accounting system that accumulates and assigns manufacturing costs to each unique product or specialized service based on a specific customer order. It assigns costs to specific units or products. If a company uses direct labor as its cost driver with budgeted direct labor of $200,000 and manufacturing overhead of $300,000, its predetermined overhead rate is 150% of direct labor costs.

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    A cost system is designed by a firm to monitor and aggregate costs incurred to provide cost accounting information to managerial decision-makers. It comprises forms, processes, controls, and reports to report product and service costs for profitability analysis, inventory valuation and cost control. Job order costing is an accounting system that accumulates and assigns manufacturing costs to each unique product or specialized service based on a specific customer order. It assigns costs to specific units or products. If a company uses direct labor as its cost driver with budgeted direct labor of $200,000 and manufacturing overhead of $300,000, its predetermined overhead rate is 150% of direct labor costs.

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    10 views12 pages

    Job Order Costing

    Uploaded by

    Dahlia Blooms
    A cost system is designed by a firm to monitor and aggregate costs incurred to provide cost accounting information to managerial decision-makers. It comprises forms, processes, controls, and reports to report product and service costs for profitability analysis, inventory valuation and cost control. Job order costing is an accounting system that accumulates and assigns manufacturing costs to each unique product or specialized service based on a specific customer order. It assigns costs to specific units or products. If a company uses direct labor as its cost driver with budgeted direct labor of $200,000 and manufacturing overhead of $300,000, its predetermined overhead rate is 150% of direct labor costs.

    Copyright:

    © All Rights Reserved
    Download as PPSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppsx, pdf, or txt
    of 12

    Cost System

    To primarily provide cost accounting


    information to managerial decision-makers,
    a Cost System is designed and used by a
    firm to monitor the costs incurred. It is
    comprised of a set of forms, processes,
    controls, and reports intended to aggregate
    and report to management the cost of their
    products and services for profitability
    analysis, inventory valuation and cost
    control.
    JOB ORDER COSTING
    This is a system of accumulating and assigning manufacturing costs to each product or service based on specific
    customer order. Manufacturing companies using job order costing system are those which receive orders for
    customized products and services (heterogeneous).

    -is an accounting system that


    accumulates costs by job

    -A job is the production of a


    unique product or
    specialized service

    -It assigns costs to specific


    units or products
    EXAMPLE

    Predetermined OH rate
    = Total FOH = P300,000
    DLC P200,000

    = 150% of DLC

    Assume that the company decided to use direct labor as its cost driver.
    If the budgeted amounts of direct labor and manufacturing overhead are anticipated to be
    P200,000 and P300,000, respectively, what is the firm's predetermined overhead rate?
    EXAMPLE

    Job 791:
    DM P14,000
    DL 8,000
    OH (150% of DLC) 12,000
    WIP Inventory, 1/31 P34,000
    Compute the cost of work-in-process inventory
    as of January 31.
    EXAMPLE

    Job 789:
    Beginning Bal. P22,500
    DM 2,000
    DL 6,000
    OH (150% of DLC) 9,000 P39,500

    Job 790:
    DM P 9,000
    DL 10,000
    Compute the cost of jobs completed during OH (150% of DLC) 15,000 P34,000
    January. Cost of completed jobs P73,500
    EXAMPLE

    Cost of completed jobs P73,500


    With markup rate x 140%
    Total Sales Revenue P102,900

    OR per job:
    Job 789 (P39,500 x 140%) P55,300
    Suppose that the company sold all of its Job 790 (P34,000 x 140%) 47,600
    completed jobs, adding a 40% markup to cost. Total Sales Revenue P102,900
    How much would the firm report as sales
    revenue?
    FYI: No assignment for today, but
    please prepare for a quiz on
    Monday (8/16). The quiz will
    cover from cost concepts to Job
    Order Costing.
    thank you!

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