Acc 230 Chapter Note - Horngren, C.T., Datar, S.M. and...

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4-1Horngren, C.T., Datar, S.M. and Foster, G. (2003) Cost Accounting - AManagerial Emphasis, Pearson Education, Inc., New Jersey, Eleventh EditionCHAPTER 4JOB COSTING4-1Cost pool––a grouping of individual cost items.Cost tracing––the assigning of direct costs to the chosen cost object.Cost allocation––the assigning of indirect costs to the chosen cost object.Cost-allocation base––a factor that links in a systematic way an indirect cost or groupof indirect costs to a cost object.4-2In ajob-costing system,costs are assigned to a distinct unit, batch, or lot of a product orservice.In aprocess-costing system,the cost of a product or service is obtained by using broadaverages to assign costs to masses of identical or similar units.4-3An advertising campaign for Pepsi is likely to be very specific to that individual client.Job costing enables all the specific aspects of each job to be identified.In contrast, theprocessing of checking account withdrawals is similar for many customers.Here, processcosting can be used to compute the cost of each checking account withdrawal.4-4The seven steps in job costing are: (1) identify the job that is the chosen cost object, (2)identify the direct costs of the job, (3) select the cost-allocation bases to use for allocatingindirect costs to the job, (4) identify the indirect costs associated with each cost-allocation base,(5) compute the rate per unit of each cost-allocation base used to allocate indirect costs to thejob, (6) compute the indirect costs allocated to the job, and (7) compute the total cost of the jobby adding all direct and indirect costs assigned to the job.4-5Two major cost objects that managers focus on in companies using job costing are: (1)products or jobs, and (2) responsibility centers or departments.4-6Three major source documents used in job-costing systems are: (1) job cost record orjob cost sheet, a document that records and accumulates all costs assigned to a specific job,starting when work begins (2) materials requisition record, a document that contains informationabout the cost of direct materials used on a specific job and in a specific department; and (3)labor-time record, a document that contains information about the labor time used on a specificjob and in a specific department.4-7The main concern with the source documents of job cost records is the accuracy of therecords.Problems occurring in this area include incorrect recording of quantity or dollaramounts, materials recorded on one job being “borrowed” and used on other jobs, and erroneousjob numbers being assigned to materials or labor inputs.

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Term
Fall
Professor
JONES
Tags
Accounting, Cost Accounting, Finished Goods, Manufacturing Department Overhead Control

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