C4 Job : Order

Costing
Review Product vs. PeriodCosts
:

manufacturing (product) costs :

1) raw materials -

non-manufacturing (period) costs :

Costs necessary to order

2) factory labour 1) marketing/selling costs: + deliver product

3) manufacturing overhead 2) administrative costs : all executive , organizational ,

clerical costs

product costs include direct materials and labour and manuf . OH -

period costs include all selling and admin costs

-
product costs & inventory and 4 expenses of cost to produce goods sold

inventory cogs
Sale I
-
a >
-

d
balance sheet income statement

Process
Cost Sym
-

measures the cost to produce identical or very similiar products over a period of time (week , month)
-
. Chips electronics
ie , (fridges) ,
food items toys ,

-
costs are assigned to departments or processes for a specific time period

-
all costs are assigned equally to each unit produced by the same manufacturing process

Order
CostingSystem
-

measures cost to complete each unique job/batch that have distinct characteristics

L. movies, tailored clothing unique products (house)

,
,
Custom wedding cakes

calculates cost per job

- more precise than process costing

- > useful for projecting costs +
job bidding

-
more labour intensive

manufacturing overhead is allocated to products ,

but is not as traceable (DM , DL) so it becomes a
challenge
-

100 transfers manufacturing costs into 3 categories of inventory :

3
raw materials
1) work-in-process

factory labour
2) finished/completed goods

manufacturing overhead
3) cost of goods sold

-
not possible to calculate overhead on specific jobs so a predetermined rate is set at the start of the year based on expected activity (i. e. direct labour cost ,
machine hours)

-use :
estimated annual overhead cost
=
rate
estimated annual activity

-
small manufacturers have a
single rate while large manufacturers have one for each department/activity base

Sheets
job cost sheet

materials cost sheet

labor cost sheet

predetermined overhead rate not feasible to calculate overhead

: for specific jobs so a predetermined rate is set at the start of the year based on expected activity

dr work in process (job 123)

or manufacturing overhead