CH_3_Course_Notes_-_long_version

CH_3_Course_Notes_-_long_version - MSU ACC 202Kattelus...

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MSU ACC 202—Kattelus Course Notes—CH 3—Spring 2009 JOB-ORDER COSTING OUTLINE 1 . The documents used and the flow of costs in job-order costing. Materials requisition form Direct labor time ticket Job cost sheet 2. Applying overhead using a predetermined overhead rate. Computing the predetermined overhead rate Applying the predetermined overhead rate to jobs 3. Underapplied and overapplied overhead. How is it determined? What is it? What is done with it? 4. T-accounts in a job-order costing system. THE FLOW OF DOCUMENTS IN A JOB-ORDER COSTING SYSTEM Order A sales order is prepared as a basis for issuing a Sales Order Production Order
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MSU ACC 202—Kattelus Course Notes—CH 3—Spring 2009 Production Order A production order initiates work on a job, whereby costs are charged through... The various costs of production are accumulated on a form, prepared by the accounting department, known as a... The job cost sheet forms the basis for valuing ending inventories and Cost of Goods Sold. Materials Requisition Direct Labor Time Ticket Predetermined Overhead Rates Job Cost Sheet
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MSU ACC 202—Kattelus Course Notes—CH 3—Spring 2009 APPLICATION OF OVERHEAD In a job-order costing system, the cost of a job consists of: 1. Actual direct material costs traced to the job. 2. Actual direct labor costs traced to the job. 3. Manufacturing overhead applied to the job using a predetermined overhead rate. Actual overhead costs are not assigned to jobs. A predetermined overhead rate is used to assign overhead cost to products and services. It is: Based on estimated data. Established before the period begins. Why Use Estimated Data? Waiting until the year is over to determine actual overhead costs would be too late. Managers want cost data immediately. Overhead rates, if based on actual costs and activity, would vary substantially from month to month. Much of this variation would be due to random changes in activity.
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