Professional Documents
Culture Documents
Job Costing
Job Costing
8
Job-Order Costing System
Job-Order Costing Systems a productcosting system in which costs are
assigned to batches or job orders of
production.
Finished Product can be individually
identified
Process
Costing
Job-order
Costing
Chapter 10
Many different jobs are worked on during each period.
Products are manufactured to order. (customer satisfaction)
Unit costs are computed by job
Job-order
Costing
Process Costing
1. Homogeneous products
products
2. Cost accumulated by job
2. Costs accumulated by
process or department
BEAT
SOUTH
HIGH
Process or
job-order
costing?
Process
Process
Job order
Advertising agency
Law firm
Job order
Job order
Illustration 2-1
Black ink $
Colored Ink
Typesetting $
225
Invitations $
Job #9501
Job #9502
Illustration 3-2
Job-Order Costing
Job 425
Job 426
Job 427
Total
Schedule
jobs
Begin
production
Order
materials
THE JOB
Issues
Units Cost Total
Direct Materials
Direct Labor
Manufacturing
Overhead
Job No. 1
Job No. 2
Job No. 3
Charge
direct
material and
direct labor
costs to
each job as
work is
performed.
Direct Labor
Job No. 2
Manufacturing Overhead
Job No. 3
Apply overhead to
each job using a
predeter-mined
rate.
The predetermined
overhead rate
(POHR) used to
apply overhead to
jobs is determined
before the period
begins.
POHR =
Estimated total units in the
allocation base for the coming period
Job Cost
Sheet
July 1 Direct
100 lbs. @ $
0.25 = $Materials
25
3
75 oz. @
$1.40 = 105
July 1 Direct
3 hrs.
@
Labor
$10.00 = $ 30
3 7 hrs @
$10.00 =
70
Factory
July 7 10Overhead
dlh x $2
= $ 20
A job-cost sheet is a
document used to
accumulate the cost
for a specific job in a
job-cost system to
determine the total
and unit cost of the
completed job
The primary
document for
tracking the costs
associated with a
given job is the job
cost sheet.
Will E. Delite
Will E. Delite
The materials requisition form also serves as the source document for
recording material usage in the accounting records.
Accumulate direct
labor costs by means
of a work record,
such as a time ticket,
for each employee
Job-Order Costing
Document Flow Summary
Lets summarize
the document
flow we have
been discussing
in a job-order
costing system.
Job-Order Costing
Document Flow Summary
Materials used
may be either
direct or
indirect.
Direct
material
Materials s
Materials
Ledger
Cards
Materials
Materials
Ledger
Cards
Materials
Ledger
Cards
Requisition
Requisition
Indirect
materials
Job Cost
Sheets
Manufacturing
Overhead
Account
Job-Order Costing
Document Flow Summary
An employees
time may be either
direct or indirect.
Direct
Labor
Job Cost
Sheets
Employee Time
Ticket
Indirect
Labor
Manufacturing
Overhead
Account
Job-Order Costing
Document Flow Summary
Employee
Time Ticket
Other
Actual OH
Charges
Materials
Requisition
Indirect
Labor
Manufacturing
Applied
Overhead
Overhead
Account
With
POHR
Indirect
Material
Job Cost
Sheets
(2)
(4)
(5)
(6)
Bal.
Factory Labor
32,000
(5)
32,000
5
Flow of Costs
(7)
(8)
Key to Entries:
Manufacturing Overhead
(3)
13,800
(6)
22,400
(4)
6,000
(5)
4,000
Bal.
1,400
Accumulation
1. Purchase raw materials
2. Incur factory labor
3. Incur manufacuring
overhead
4.
5.
6.
7.
8.
Assignment
Raw materials are used
Factory labor is used
Overhead is applied
Completed goods are
recognized
Cost of goods sold is
recognized
Raw Materials
Material
Purchases
Direct
Materials
Direct
Materials
Indirect
Materials
Mfg. Overhead
Actual
Indirect
Materials
Applied
Overhead control is
debited for the cost
of actual overhead
Salaries and
Wages Payable
Wages payable is
credited for the cost
of direct labour
Direct
Labor
Direct
Materials
Direct
Labor
Indirect
Labor
Mfg. Overhead
Actual
Indirect
Materials
Indirect
Labor
Overhead is
credited
for
applied
overhead
Overhead
Applied
Applied
Overhead
Applied to
Work in
Process
Now lets
complete the
goods and sell
them.
Cost of
Goods
Mfd.
Finished Goods
Cost of
Goods
Mfd.
Debit
finished
goods
for
COGM
Cost of
Goods
Sold
Cost of
Goods
Sold
Credit finished
goods
for
value of units
sold
JOB COSTING-TREATMENT
MATERIAL
LABOUR
CHARGED FOR EACH JOB
INFORMATION FROM JOB TIME TICKET
OVERHEADS
ESTIMATED FOR VARIOUS COST CENTRES
ALLOCTAED TO VARIOUS JOBS ON SUITABLE BASIS
CAHRGED TO WIP BY ABSORBTION RATE
JOB COSTING-RECORDING
JOB
JOB No. OR WORK ORDER No.
JOB COST CARD (COLLECTS ALL COST DATA
RELATED TO JOB FROM
MATERIAL REQUISITION NOTE
JOB TIME SHEET
JOB TICKETS
UNIT COST
FOR JOB ORDER
COMPLETED
JOB ORDER
NOT FINISHED
JOB ORDER
DONE FINISHED
THROUGH
PRIME COST
+ABSORBD OVHD
COST SHEET THAN MARKED COMPLETE
REMOVED FROM JOB LEDGER
ENTRY MADE IN FINISHED GOODS LEDGER