Chapter 4 - Cost Accounting - JKBaker - Job Costing Chapter...

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J. Keith Baker © 2015Job CostingChapter 4ACCT 3270Fall –2015Jay K. Baker,MSFS, MBA, CPA, CFP®
J. Keith Baker © 2013Defining a JobLO 4-1Describe the building-block conceptsof costing systems.Unit of a product that is easilydistinguishable from other unitsJob:Firm that produces jobsJob shop:
J. Keith Baker © 2013Basic Costing Terminology…Several key points from prior chapters:Cost objects—including responsibility centers, departments, customers, products, and so onDirect costs and tracing—materials and laborIndirect costs and allocation—overhead
J. Keith Baker © 2013
J. Keith Baker © 2013Costing SystemsJob-costing—system accounting for distinct cost objects called jobs. Each job may be different from the next, and consumes different resources.Wedding announcements, aircraft, advertisingProcess-costing—system accounting for mass production of identical or similar products. In this type of system, we divide the total cost of producing an identical or similar product or service by the total number of units produced to obtain a per-unit cost.LO 4- 2Distinguish job costing from process costing.
J. Keith Baker © 2013Costing Systems Illustrated
J. Keith Baker © 2013Costing Approaches
LO 4- 3Describe the approaches to evaluating and\implementing job-costing systems.
J. Keith Baker © 2013Costing Approaches Summarized
J. Keith Baker © 2013Seven-Step Job Costing1.Identify the job that is the chosen cost object.2.Identify the direct costs of the job.3.Select the cost-allocation base(s) to use for allocating indirect costs to the job.4.Match indirect costs to their respective cost-allocation base(s).LO 4- 4Outline the seven-step approach to normal costing.
J. Keith Baker © 2013Seven-Step Job Costing

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