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Week 4 Product Costing Systems.docx - Week 4 Product...

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Week 4 Product Costing Systems Learning Objectives 1. Differentiate the cost accounting systems of service and manufacturing firms and of unique and standardised products. 2. Discuss the interrelationship of cost accumulation, cost measurement, and cost assignment. 3. Identify the source documents used in job-order costing and prepare the journal entries. 4. Describe the cost flows associated with job-order costing and prepare the journal entries. 5. Explain how activity-based costing is applied to job-order costing. 6. Explain how spoiled units are accounted for in a job-order costing system (not required). Types of product-costing systems Job/service costing (Extract 6) - Used for production of unique, high-cost items - Built to order rather than mass produced - Many costs can be directly traced to each job, or batch of products. Typical job order cost applications: - Special-order printing - Building construction - Also, in service industry - Hospitals - Accounting firms Process costing (Extract 7)
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- Used for production of identical, low cost items. - Mass produced in automated continuous production process. - Costs cannot be directly traced to each unit of product. Typical process cost applications: - Petrochemical refinery - Paint manufacturer - Paper mill Characteristics of the production process Manufacturing firms versus service firms Manufacturing firms -
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