Lecture 17 job order costing

Lecture 17 job order costing - Job-Order Costing Product...

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Unformatted text preview: Job-Order Costing Product costing: the process of assigning costs to the products or services provided by a company. Process costing – used in situations where the company produces many units of a single product for long period. Job-Order costing – used in situations where many different products are produced each period. Cost records must be maintained for each distinct product or job. Traditional Job-Order Costing THE JOB Direct material Direct labor T r a c e d d i r e c t l y t o e a c h j o b T r a c e d d i r e c t l y t o e a c h j o b Manufacturing overhead (OH) Applied to each job using an overhead rate total manufacturing overhead cost for the period total units in the allocation base for the period Traditional Job-Order Costing --Application of Manufacturing Overhead Ideally, the allocation base is a cost driver that causes overhead. Overhead Rate = Overhead applied = Overhead rate × units in the allocation base for the job STEP 1: Calculate overhead rate STEP 2: Apply overhead to jobs Typical allocation base Direct labor-hours (DLH) Direct labor cost Machine hours (MH) Units of product (used in the single-product firm) Ideally, the allocation based used should be the cost driver of overhead cost. Cost driver is a factor that drives driver of overhead cost....
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This note was uploaded on 04/11/2009 for the course ACCT 410x taught by Professor Bonner during the Fall '06 term at USC.

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Lecture 17 job order costing - Job-Order Costing Product...

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