ACCT2301-002-chap4-sp2009

ACCT2301-002-chap4-sp2009 - Chapter 4 Job-Order Costing...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Chapter 4 Job-Order Costing adapted from  Fundamental Cornerstones of Managerial  Accounting Heitger, Mowen and Hansen (2008) Professor D. Collins
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Learning Objectives – Chapter 4 Describe the differences between job-order costing and  process costing, and identify the types of firms that would  use each method. Compute the predetermined overhead rate, and use the rate  to assign overhead to units or services produced. Identify and set up the source documents used in job order  costing. Describe the cost flows associated with job-order costing. Prepare the journal entries associated with job-order costing.
Background image of page 2
3 Job-Order versus Process Costing Systems The objective of both systems is to compute unit  costs. The choice between the two types of systems is  dictated by the type of product/service being  provided or manufactured. Job costing – a number of different types of products  or services.  Costs accumulated by job. Process costing – masses of similar product or  service units.  Costs accumulated by process or  department.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 Other Characteristics of Job-Order Costing Systems Costs are accumulated by job.  If a job consists of a  number of identical units, the cost of an individual unit  can then be computed as sum of the costs of the job,  divided by the number of units produced. There is a subsidiary account, or job cost record, for  each job. The costs of each inventory account (e.g., WIP, FG)  equals the sum of the costs accumulated for each job  in that inventory.
Background image of page 4
5 Why Accumulate Costs by Job? Managers can use their knowledge of the costs of  prior and current jobs to estimate the costs of  prospective jobs. Managers can compare actual job costs to the  estimated (or budgeted) job costs in order to  control costs. Since the actual costs of jobs sometime deviate  from estimated costs, managers can use job cost  information to renegotiate contracts with  customers.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 Cost Tracing versus Cost Allocation – A Review Direct costs  are traced to the specific job. Indirect costs  are allocated to the specific job,  because they cannot be easily traced to the  job. Costs are allocated to jobs because jobs  consume costly resources that cannot be  traced in an economically feasible manner.
Background image of page 6
7 Methods of Assigning Costs to Jobs Actual costing  - a costing method that assigns  direct costs and indirect costs to jobs based on  the actual costs incurred. Normal costing
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/16/2009 for the course ACCT 2301 taught by Professor Staff during the Spring '08 term at Texas Tech.

Page1 / 24

ACCT2301-002-chap4-sp2009 - Chapter 4 Job-Order Costing...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online