Brewer9e Chap02 PPT

Job-Order Costing:
Calculating Unit Product Costs
CHAPTER 2
Introduction to
Managerial Accounting
Ninth edition
Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.
2-2
Job-Order Costing: An Overview
Job-order costing systems are used

when:
1. Many different products are produced each
period.
2. Products are manufactured to order.
3. The unique nature of each order requires
tracing or allocating costs to each job, and
maintaining cost records for each job.
2-3
Job-Order Costing: Examples

Examples of companies that
would use job-order costing include:
1. Bechtel International (large-scale
construction)
2. Boeing (aircraft manufacturing)
3. Vistaprint (designer and printer of
business cards)
4. LSG SkyChefs (preparer of airline meals)
2-4
Job-Order Costing – Cost Flow 1

Direct Costs
Direct Materials Charge direct

Job No. 1 material and
direct labor
Direct Labor
Job No. 2 costs to each
job as work is
Job No. 3 performed.
2-5
Job-Order Costing – Cost Flow 2

Manufacturing
Direct Costs
Overhead,
Direct Materials including
Job No. 1 indirect
materials and
Direct Labor indirect labor,
Job No. 2
Indirect Costs are allocated to
Manufacturing all jobs rather
Job No. 3
Overhead than directly
traced to each
job.
2-6
The Job Cost Sheet

PearCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-XX
Date Completed
Department B3 Units Completed
Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing Overhead
Req. No. Amount Ticket Hours Amount Hours Rate Amount
Cost Summary Units Shipped

Direct Materials Date Number Balance
Direct Labor
Manufacturing Overhead
Total Cost
Unit Product Cost
2-7
Measuring Direct Materials Cost – Part 1
PearCo Materials Requisition Form

Requisition No. X7 - 6890 Date 3-4-XX
Job No. A - 143
Department B3
Description Quantity Unit Cost Total Cost

2 x 4, 12 feet 12 $ 3.00 $ 36.00
1 x 6, 12 feet 20 4.00 80.00
$ 116.00
Authorized
Signature Will E. Delite
2-8
Measuring Direct Materials Cost – Part 2

Date Completed
X7-6890 $ 116

Direct Materials $ 116 Date Number Balance
Direct Labor
Total Cost
Unit Product Cost
2-9
Measuring Direct Labor Costs

PearCo Employee Time Ticket
Time Ticket No. 36 Date 3-5-XX

Employee I. M. Skilled Station 42
Starting Ending Hours Hourly

Time Time Completed Rate Amount Job No.
0800 1600 8.00 $ 15.00 $ 120.00 A-143
Totals 8.00 $ 15.00 $ 120.00 A-143
Supervisor C. M. Workman
2-10
Job-Order Cost Accounting

Date Completed
X7-6890 $ 116 36 8 $ 120

Direct Labor $ 120
Total Cost
Unit Product Cost
2-11
Learning Objective 1
Compute a predetermined
overhead rate.
2-12
Why Use an Allocation Base?

An allocation base,
such as direct labor hours, direct labor dollars,
or machine hours, is used to assign
manufacturing overhead to individual jobs.
We use an allocation base because:
a. It is impossible or difficult to trace overhead costs to
particular jobs.
b. Manufacturing overhead consists of many different items
ranging from the grease used in machines to the
production manager’s salary.
c. Many types of manufacturing overhead costs are fixed
even though output fluctuates during the period.
2-13
Application
The predetermined overhead rate
(POHR) used to apply overhead to jobs
is determined before the period begins.
Estimated total manufacturing
overhead cost for the coming period
POHR =
Estimated total units in the
allocation base for the coming period
Ideally, the allocation base is a

cost driver that causes
overhead.
2-14
The Need for a POHR
Predetermined overhead rates that rely

upon estimated data are often used
because:
1. Actual overhead for the period is not
known until the end of the period, thus
inhibiting the ability to estimate job costs
during the period.
2. Actual overhead costs can fluctuate
seasonally, thus misleading decision
makers.
2-15
Computing Predetermined
Overhead Rates
The predetermined overhead rate is computed before the period begins
using a four-step process.
1. Estimate the total amount of the allocation base (the denominator)
that will be required for next period’s estimated level of production.
2. Estimate the total fixed manufacturing overhead cost for the coming
period and the variable manufacturing overhead cost per unit of the
allocation base.
3. Use the following equation to estimate the total amount of
manufacturing overhead:
Y = a + bX
Where,
Y = The estimated total manufacturing overhead cost
a = The estimated total fixed manufacturing overhead cost
b = The estimated variable manufacturing overhead cost
per unit of the allocation base
X = The estimated total amount of the allocation base
4. Compute the predetermined overhead rate.
2-16
Apply overhead cost to jobs

using a predetermined
overhead rate.
2-17
Overhead Application Rate

PearCo estimates that it will require 160,000 direct labor-hours to
meet the coming period’s estimated production level. In addition,
the company estimates total fixed manufacturing overhead at
$200,000, and variable manufacturing overhead costs of $2.75
per direct labor hour.
Y = a + bX
Y = $200,000 + ($2.75 per direct labor-hour × 160,000 direct labor-hours)
Y = $200,000 + $440,000
Y = $640,000
$640,000 estimated total manufacturing overhead

POHR =
160,000 estimated direct labor hours (DLH)
POHR = $4.00 per direct labor-hour

2-18
Recording Manufacturing Overhead

Date Completed 3-5-XX
Department B3 Units Completed 2
X7-6890 $ 116 36 8 $ 120 8 $ 4 $ 32

Direct Labor $ 120
Manufacturing Overhead $ 32
Total Cost
Unit Product Cost
2-19
Compute the total cost and

the unit product cost of a job
using a plantwide predetermined
overhead rate.
2-20
Calculating Total Cost of Job

X7-6890 $ 116 36 8 $ 120 8 $ 4 $ 32

Direct Labor $ 120
Total Cost $ 268
Unit Product Cost
2-21
Calculating Unit Product Cost

X7-6890 $ 116 36 8 $ 120 8 $ 4 $ 32

Direct Labor $ 120
Total Cost $ 268
Unit Product Cost $ 134
2-22
Concept Check 1
Job WR53 at NW Fab, Inc. required $200 of
direct materials and 10 direct labor hours at
$15 per hour. Estimated total overhead for the
year was $760,000 and estimated direct labor
hours were 20,000. What would be recorded
as the cost of job WR53?
A.$200
B.$350
C.$380
D.$730
2-23
Concept Check 1a
Job WR53 at NW Fab, Inc. required $200 of
direct materials and 10 direct labor hours at
$15 per hour. Estimated total overhead for the
year was $760,000 and estimated direct labor
hours were 20,000. What would be recorded
as the cost of job WR53?
A.$200. POHR = $760,000/20,000 hours $38
B.$350. Direct materials $200

Direct labor $15 x 10 hours $150
C.$380. Manufacturing overhead $38 x 10 hours $380
D.$730. Total cost $730
2-24
Job-Order Costing – A Managerial

Perspective – Part 1
Inaccurately assigning manufacturing
costs to jobs adversely influences
planning and decisions made by
managers.
1. Job-order costing systems can accurately
trace direct materials and direct labor
costs to jobs.
2. Job-order costing systems often fail to
accurately allocate the manufacturing
overhead costs used during the production
process to their respective jobs.
2-25
Job-Order Costing – A Managerial

Perspective – Part 2
Choosing an Allocation Base
Job-order costing systems often use allocation bases that
do not reflect how jobs actually use overhead resources.
The allocation base in the predetermined overhead rate
must drive the overhead cost to improve job cost accuracy.
A cost driver is a factor that causes overhead costs.
Many companies use a single predetermined plantwide

overhead rate to allocate all manufacturing overhead costs to
jobs based on their usage of direct-labor hours.
1. It is often overly-simplistic and incorrect to assume that
direct-labor hours is a company’s only manufacturing
overhead cost driver.
2. If more than one overhead cost driver can be identified, job
cost accuracy is improved by using multiple predetermined
overhead rates.
2-26
Compute the total cost and

the unit product cost of a job
using multiple predetermined
overhead rates.
2-27
Information to Calculate Multiple

Predetermined Overhead Rates
Dickson Company has two production departments, Milling and
Assembly. The company uses a job-order costing system and
computes a predetermined overhead rate in each production
department. The predetermined overhead rate in the Milling
Department is based on machine-hours and in the Assembly
Department it is based on direct labor-hours. The company uses
cost-plus pricing (and a markup percentage of 75% of total
manufacturing cost) to establish selling prices for all of its jobs. At
the beginning of the year, the company made the following
estimates:
2-28
Step 1 – Calculate the Predetermined

Overhead Cost for Each Department
During the current month the company started
and completed Job 407. It wants to use its
predetermined departmental overhead cost
and rate for the Milling and Assembly
Departments.
Milling Department = $390,000 + ($2.00 per MH ×60,000 MHs) = $510,000
Assembly Department = $500,000 + ($3.75 per DLH ×80,000 DLHs) = $800,000
2-29
Step 2 – Calculate the Predetermined

Overhead Rate for Each Department
Use the amounts determined on the previous slide
to calculate the predetermined overhead rate
(POHR) of each department.
Milling Department = $510,000 ÷ 60,000 MHs = $ 8.50 per MH

Assembly Department = $800,000 ÷ 80,000 DLHs = $10.00 per DLH
Step 3 – Calculate the Amount of 2-30
Overhead Applied from Both Departments

to a Job
Use the POR calculated on the previous
slide to determine the overhead applied
from both departments to Job 407:
Milling Department = 90 MHs×$8.50 per MH = $765

Assembly Department = 20 DLHs×$10 per DLH = $200
2-31
Step 4 – Calculate the Total Job Cost for

Job 407
We can use the information given to calculate
the amount of the total cost of Job 407.
Here is the calculation:
2-32
Step 5 – Calculate the Selling Price for

Job 407
The selling price of Job 407 assuming a 75% markup.
It is important to emphasize that using a departmental

approach to overhead application results in a different
selling price for Job 407 than would have been derived
using a plantwide overhead rate based on either direct
labor-hours or machine-hours. The appeal of using
predetermined departmental overhead rates is that they
presumably provide a more accurate accounting of the
costs caused by jobs, which in turn, should enhance
management planning and decision making.
2-33
Multiple Predetermined Overhead Rates—

An Activity-Based Approach
When a company creates overhead rates
based on the activities that it performs, it is
employing an approach called activity-based
costing.
Activity-based costing is an alternative
approach to developing multiple
predetermined overhead rates. Managers
use activity-based costing systems to more
accurately measure the demands that jobs,
products, customers, and other cost objects
make on overhead resources.
2-34
Job-Order Costing for Financial

Statements to External Parties
The amount of overhead applied to all jobs
during a period will differ from the actual amount
of overhead costs incurred during the period.
1. When a company applies less overhead to
production than it actually incurs, it creates
what is known as underapplied overhead.
2. When it applies more overhead to production
than it actually incurs, it results in
overapplied overhead.
2-35
Financial Statement Adjust for Overhead

Applied
The cost of goods sold reported on a company’s
income statement must be adjusted to reflect
underapplied or overapplied overhead.
1. The adjustment for underapplied overhead
increases cost of goods sold and
decreases net operating income.
2. The adjustment for overapplied overhead
decreases cost of goods sold and
increases net operating income.
2-36
Job Cost Sheets: A Subsidiary

Ledger
All of a company’s job cost sheets
collectively form a subsidiary ledger.
Job Number A - 143 PearCo Job Date Initiated
Cost Sheet 3-4-17
Date Completed 3-5-17
Job Number A - 143 PearCo Job Date Initiated
Cost Sheet 3-4-17
Item JobWooden
Number cargo
A -crate
143 PearCo JobDate Initiated
Cost Sheet 3-4-17
Direct
Item Materials
Wooden
Job Number cargo Direct
A -crate
143 Labor Manufacturing
Date Initiated Overhead
3-4-17
Department B3 PearCo Job Completed
Units Cost Sheet 2
Req. No. Amount Ticket Hours AmountDate Hours
CompletedRate Amount
3-5-17
Direct
Item Materials
Wooden
Job Number cargo A Direct
crate
- 143 Labor Manufacturing
Date Initiated Overhead
3-4-17
X7-6890 Department
$ 116 36
B3 8 $ 120 Units
PearCo Job 8 Completed
Cost $Sheet4 $ 2 32
Req. No. Amount Ticket Hours Amount Date Hours Rate
Completed Amount
3-5-17
Direct
Item Materials
Wooden
Job Number cargo A
Direct
crate
- 143
Labor Manufacturing
Date Initiated
Overhead
3-4-XX
X7-6890 Department
$ 116 36
B3 8 $ 120 Units 8 Completed
$ 4 $ 2 32
Req. No. Amount Ticket Hours AmountDate Hours Rate
Completed Amount
3-5-XX
Direct
Item $Materials
Wooden cargo Direct Labor
crate Manufacturing Overhead
X7-6890 116 36 8 $ 120 8 $ 4 $ 2 32
Req. Department
Cost
No. Summary
Amount B3
Ticket Hours Amount Units
UnitsCompleted
Shipped
Hours Rate Amount
Direct
Direct Materials
X7-6890Item $Materials
Wooden
116 cargo
36 Direct
crate
$ 8 116Labor
$ Date
120 Number Manufacturing
8 $Balance
4 $ Overhead
32
Req. CostAmount
No. Summary Ticket Hours Amount Units Shipped
Hours Rate Amount
Direct Labor $ 120
Direct Materials
ManufacturingX7-6890 $ 116
Overhead
Cost Summary 36 $ $ 32 8116 $Date 120 Number
Units $Balance
8 Shipped 4 $ 32
Direct Labor Req. No. Amount Ticket Hours
$ 120 Amount Hours Rate Amount
Total Direct
Cost Materials $ 268 116
ManufacturingX7-6890 $ 116
Overhead
Cost Summary 36 $ $ 32 8 $ Date
120 Number $Balance
8 Shipped
Units 4 $ 32
Unit Product Cost
Direct Labor $ 120
Total Direct
Cost Materials $ 268 $ 116 Date Number Balance
Manufacturing Overhead Cost Summary $ $ 32120 Units Shipped
Unit Product Cost
Direct Labor
Total Direct
Manufacturing Overhead Cost Summary $ 32 Units Shipped
Unit Product
Direct Cost
Labor $ 120
Total Direct
Manufacturing
Unit Product Cost Overhead $ 32
Direct Labor $ 120
Total Cost $ 268
Unit Product Cost
Total Cost $ 268
Unit Product Cost
2-37
Job Cost Sheets: Balance Sheet

Reporting
The job costs sheets provide an underlying
set of financial records that explain what
specific jobs comprise the amounts reported
in Work-in-Process and Finished Goods on
the balance sheet.
Pe arCo Job Cost She et
Job Numbe r A - 143 Pe arCo Job Da te Initia
Cost She ted
et 3-4-17
Da te Complete d 3-5-17
Job Numbe r A - 143 Pe arCo Da te Initia ted 3-4-17
De pa rtme nt B3 Units Completeet
Job Cost She d 2
Item Job W oode
Numbe n ca r rgo
A -cra
143 te Pe arCo Da te
Job Initia
Cost Shetedet 3-4-17
De pa rtme nt B3 Units Complete d 2
Dire
Itemct MaWte
Job ria ls
oode
Numbe n carrgo Dire
A -cra143tect Labor DaManufa
te cturing
Initia ted Overhe ad
3-4-17
De pa rtme nt B3 Pe arCo Job
Units Cost
CompleteShe et
d 2
Re q. No. Amount Ticket Hours AmountDaHours te Complete dRa te Amount
3-5-17
Dire ct Ma
Item W
Job te ria
oode
Numbels
n car rgoA Dire
cra
- 143 tect Labor DaManufa
te cturing
Initia ted Overhe ad
3-4-17
X7-6890 De$ 116
pa rtme nt B3 36 8 $ 120
PearCo Job 8 Cost
Units Complete d$
Sheet 4 $ 2 32
Re q. No. Amount Ticket Hours Amount Da Hours
te CompleteRa ted Amount
3-5-17
Dire
Itemct Ma W
Job
te ria ls
oode
Numbern ca rgoA
Dire
cra
- te
143
ct Labor Manufa
Date
cturing3-4-XX
Initiated
Overhe ad
X7-6890 De$pa rtme 116 nt 36 B3 8 $ 120 Units 8 Complete
$ d4 $ 2 32
Re q. No. Amount Ticket Hours Amount Hours
Date Ra te Amount
Dire
Itemct Ma W te ria ls
oode n ca rgo Dire
cra tect Labor Manufa cturing3-5-XX
Completed Overhe ad
X7-6890 Department
$
Cost 116
Summa36 B3
ry 8 $ 120 Units 8 Completed
Units $
Shippe d 4te $ 2Amount
32
Re q. No. Amount Ticket Hours Amount Hours Ra
Dire ct Ma Dire
te riaItem
X7-6890 ls ct Ma
$ te ria
Wooden
116 ls cargo
36 Dire
crate ct Labor
$ 8 116 $ Da te
120 Manufa
Numbe
8 cturing
r $Ba la nce
4 Overhe
$ 32 ad
Re q. No. Cost Summa ry
Amount Ticket$ Hours Amount Units ShippeRa
Hours d te Amount
Dire ct Labor 120
Dire ct Ma Direct
te ria ls Materials Direct
$ 8116 Labor Manufacturing Overhead
Manufa cturingX7-6890Overhe $ ad116
Cost Summa36 ry $ 32 $Da120te Numbe
Units
r $
8 Shippe Ba la nce
d 4 $ Amount32
Dire ct Labor Req. No. Amount Ticket$ Hours 120 Amount Hours Rate
Total Dire
Costct Ma te ria ls $ 268$ 116 Da te Numbe r Ba la nce
Manufa cturing X7-6890Overhe $ ad116
Cost Summa 36
ry $ 8
32 $ 120 8 Shippe
Units $ d 4 $ 32
Unit Product Cost
Dire ct Labor $ 120
Total Dire
Costct Ma te ria ls $ 268
$ 116 Da te Numbe r Ba la nce
Manufa cturing Overhe ad
Cost Summa ry $ 32 Units Shippe d
Unit Product Cost
Dire ct Labor $ 120
Total Dire
Cost Ma te ria ls $ 268
Manufact cturing Overhe CostadSummary $ $ 32116 Da te Numbe r Ba la nce
Units Shipped
Unit Product
Dire Cost
ct Labor
Total Cost
Direct Materials $ $268 $
120
116 Date Number Balance
UnitManufa
Product cturing
Cost Overhe ad $ 32
Direct Labor $ 120
Total Cost $ 268
Unit Product Cost
Total Cost $ 268
Unit Product Cost
2-38
Job Cost Sheets: Income Statement

Reporting
The job costs sheets provide an underlying set
of financial records that explain what specific
jobs comprise the amounts reported in Cost
of Goods Sold on the income statement.
Pe a rCo Job Cost She e t
Job Numbe r A - 143 Pe a rCo Job Da te Initia
Cost Sheteedt 3-4-17
Da te Comple te d 3-5-17
Job Numbe r A - 143 Pe a rCo Job Da te Initia
Cost Shete e
dt 3-4-17
De pa rtme nt B3 Units Comple te d 2
Ite m Job W oode
Numbe n ca r rgo
A -cra
143 te Pe a rCo JobDa te Initia
Cost Shete edt 3-4-17
De pa rtme nt B3 Units Comple te d 2
Dire ct Ma
Ite m Wte
Job ria ls
oode
Numbe n car rgo Dire
A -cra143tect La bor DaMate nufa
Initiacturing
te d Ove rhe a d
3-4-17
De pa rtme nt B3 Pe a rCo Job Comple
Units Cost She teedt 2
Re q. No. Amount Ticke t Hours AmountDaHours te Comple Ratete
d Amount
3-5-17
Dire
Ite ct
m Ma W
Job te ria
oode ls
Numben car rgoA Dire
cra
- te
143 ct La bor DaMate nufa cturing
Initia te d Ove rhe a d
3-4-17
X7-6890 De$ 116
pa rtme nt B3 36 8 $ 120
PearCo Job 8 Cost $
Units Comple te dSheet 4 $ 2 32
Re q. No. Amount Ticke t Hours Amount Da Hours
teMa Comple Ra te
te d Amount
3-5-17
Dire
Ite ct
m Ma W te ria
oode ls
n ca rgo Dire
cra tect La bor nufa cturing Ove rhe a d
X7-6890 De$Job Number
116 nt 36
A - 143 8 $ 120 Units Date Initiated
8 Comple $ 4 3-4-XX
$ 2 32
Re q. No.pa rtme
Amount B3
Ticke t Hours Amount Hours
Date
te
Rad te Amount
Dire
Ite ct
m$ MaWte ria ls
oode n ca rgo craDiretect La bor Ma nufa cturing3-5-XX
Completed Ove rhe a d
X7-6890 116 36 8 $ 120 8 $ 4 $ 2 32
Re q. Department
Cost
No. SummaB3
Amount ry
Ticke t Hours Amount Units
Units Completed
ShippeRa
Hours d te Amount
Dire ct Ma Dire
te ria
X7-6890 ls ct $
Item Ma te ria ls cargo
Wooden
116 36 Dire
$ 8 ct
crate 116 La bor
$ Da te
120 Ma nufa
Numbe
8 r $Bacturing
la nce
4 Ove rhe
$ 32 a d
Re q. No. Cost Summa ry
Amount Ticke t$ Hours Amount Units ShippeRa
Hours d te Amount
Dire ct La bor 120
Dire ct Ma Direct
te ria ls Materials Direct
$ 8116 Labor Manufacturing Overhead
Ma nufa cturing X7-6890 Ove rhe $ a d116
Cost Summa36 ry $ 32 $Da120te Numbe
Units
r $
8 Shippe Ba la nce
d4 $ 32
Dire ct La bor Req. No. Amount Ticket$ Hours 120 Amount Hours Rate Amount
Tota l Dire
Costct Ma te ria ls $ 268$ 116 Da te Numbe r Ba la nce
Ma nufa cturing X7-6890
Ove rhe $ a d116
Cost Summa36 ry $ 8
32 $ 120 8
Units $
Shippe d4 $ 32
Unit Product
Dire ct La Cost
bor $ 120
Tota l Dire
Costct Ma te ria ls $ 268
$ 116 Da te Numbe r Ba la nce
Ma nufa cturing Ove rhe Costa d Summa ry $ 32 Units Shippe d
Unit Product
Dire ct La Cost
bor $ 120
Tota l Dire
Cost Ma te ria ls $ 268
Ma nufact cturing Ove rhe a d
Cost Summary $ $ 32116 Da te Numbe r Ba la nce
Units Shipped
Unit Product
Dire ct La Cost
bor
Tota l Direct
Cost Materials $ $268 $
120
116 Date Number Balance
Unit Ma nufa cturing
Product Cost Ove rhe a d $ 32
Direct Labor $ 120
Tota l Cost $ 268
Unit Product Cost
Total Cost $ 268
Unit Product Cost
Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill. 38
2-39
Job-Order Costing in Service

Companies
Although our attention has focused upon

manufacturing applications, it bears
re-emphasizing that job-order costing
is also used in service industries.
Job-order costing is used in many different types
of service companies (for example, law firms,
accounting firms, and medical treatment).
2-40
End of Chapter 2

Brewer9e Chap02 PPT

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Brewer9e Chap02 PPT

Uploaded by

Copyright:

Available Formats

Job-Order Costing:

Calculating Unit Product Costs

Job-Order Costing: An Overview

Job-order costing systems are used

Job-Order Costing: Examples

Job-Order Costing – Cost Flow 1

Direct Materials Charge direct

Job-Order Costing – Cost Flow 2

The Job Cost Sheet

Cost Summary Units Shipped

Measuring Direct Materials Cost – Part 1

PearCo Materials Requisition Form

Description Quantity Unit Cost Total Cost

Measuring Direct Materials Cost – Part 2

Cost Summary Units Shipped

Measuring Direct Labor Costs

Time Ticket No. 36 Date 3-5-XX

Starting Ending Hours Hourly

Totals 8.00 $ 15.00 $ 120.00 A-143

Job-Order Cost Accounting

Cost Summary Units Shipped

Why Use an Allocation Base?

Ideally, the allocation base is a

The Need for a POHR

Predetermined overhead rates that rely

Apply overhead cost to jobs

Overhead Application Rate

$640,000 estimated total manufacturing overhead

POHR = $4.00 per direct labor-hour

Recording Manufacturing Overhead

Cost Summary Units Shipped

Compute the total cost and

Calculating Total Cost of Job

Cost Summary Units Shipped

Calculating Unit Product Cost

Cost Summary Units Shipped

B.$350. Direct materials $200

Job-Order Costing – A Managerial

Job-Order Costing – A Managerial

Many companies use a single predetermined plantwide

Compute the total cost and

Information to Calculate Multiple

Step 1 – Calculate the Predetermined

Milling Department = $390,000 + ($2.00 per MH ×60,000 MHs) = $510,000

Assembly Department = $500,000 + ($3.75 per DLH ×80,000 DLHs) = $800,000

Step 2 – Calculate the Predetermined

Milling Department = $510,000 ÷ 60,000 MHs = $ 8.50 per MH

Overhead Applied from Both Departments

Milling Department = 90 MHs×$8.50 per MH = $765

Step 4 – Calculate the Total Job Cost for

Step 5 – Calculate the Selling Price for

It is important to emphasize that using a departmental

Multiple Predetermined Overhead Rates—

Job-Order Costing for Financial

Financial Statement Adjust for Overhead

Job Cost Sheets: A Subsidiary

Job Cost Sheets: Balance Sheet

Job Cost Sheets: Income Statement

Job-Order Costing in Service

Although our attention has focused upon

You might also like