LECTURE 3: Job-Order Costing: Calculating Unit Product Costs

ACC 422: MANAGERIAL ACCOUNTING

BS Operations Management
Learning Objectives:
1. Compute a predetermined overhead rate;
2. Apply overhead cost to jobs using a predetermined overhead rate;
3. Compute the total cost and the unit product cost of a job using a
plantwide predetermined overhead rate;
4. Compute the total cost and the unit product cost of a job using
multiple predetermined overhead rates.
JOB ORDER COSTING

 It is used in situations where many different products, each

with individual and unique features, are produced each
period.
 In absorption costing, all manufacturing costs both fixed
and variable are assigned to units of product.
Measuring Direct Materials Cost
 Bill of materials – is a document that lists the quantity of each
type of direct material needed to complete a unit of product.

 Materials requisition form – a document that specifies the type

and quantity of materials to be drawn from the storeroom and
identifies the job that will be charged for the cost of the
materials.
Measuring Direct Materials Cost
Materials Requisition Number 14873 Date: March 2
J ob Number to be Charged 2B47
Department Milling

De s cription Quantity Unit Cos t Total Cos t

M46 Housing 2 ₱ 124 ₱ 248

G7 Connector 4 ₱ 103 ₱ 412
₱ 660
Job Cost Sheet
 Job Cost Sheet – records the materials, labor, and
manufacturing overhead costs charged to that job.
JOB COST SHEET

J ob Number 2B47 Date Initiated: March 2

Department Milling Date Completed
Item Special order coupling Units Completed
For Stock

Dire ct Mate rials Dire ct Labo r Manufacturing Ov e rhe ad

Requisition No. Amount Ticket Hours Amount Hours Rate Amount
14873 ₱ 660 843 5 ₱ 90

Co s t Summary Units Shippe d

Direct Materials
Direct Labor
Manufacturing
Overhead
Total Product
Cost
Unit Product
Cost
Measuring Direct Labor Cost
 Direct Labor – consists of labor changes that are easily traced
to a particular job.
 Indirect Labor – these are labor charges that cannot be easily
traced to specific jobs are treated as part of manufacturing
overhead.
 A completed time ticket is an hour–by-hour summary of the
employee’s activities throughout the day.
Measuring Direct Labor Cost

Time Ticket No. 843 Date: March 3

Employee Mary Holden Station 4

Time
Started Ende d Comple te d Rate Amo unt Job Numbe r
7:00 12:00 5.0 ₱ 18 ₱ 90.00 2B47
12:30 2:30 2.0 ₱ 18 ₱ 36.00 2B50
2:30 3:30 1.0 ₱ 18 ₱ 18.00 Maintenance
To tals 8.0 ₱ 144.00
THANK YOU! 