Job Order Cost Flow Lecture Notes Hello and welcome to the lecture detailing job order costs flow. In this lecture we will go through the detailed steps of job orders cost flow including accumulating manufacturing costs and assigning costs to work in process, finished goods, and cost of goods sold. Job order cost flow This illustration is a detailed presentation of the flow of cost in job order costing. The box in the lower right-hand corner indicates the major steps in the flow of costs: accumulating manufacturing costs and assigning costs to the work completed. It is a good idea to print out a copy of this chart to follow along as you watch this lecture. You will notice that each of the example Journal entries is numbered throughout this lecture. These numbers correspond to the numbers on this chart which show the flow of job order costing. Accumulating manufacturing costs: #1 raw materials costs The first step in the job order costing is to record the purchase of raw materials. In our example Frank manufacturing purchase 1000 widgets at five dollars per unit ($5000) and 300 gadgets at $30 per unit ($9000) for total cost of $14,000. The entry to record this purchase is a debit to raw materials inventory of $14,000 and a credit to accounts payable for $14,000. The debit indicates an increase in the asset raw materials. The credit indicates an increase in accounts payable, an increase in the amount Frank manufacturing owes for the purchase of goods. Accumulating manufacturing costs: #2 factory labor costs Companies debit labor costs to factory labor as they incur these costs. Assume in our example that Frank manufacturing incurs $45,000 of factory labor costs. $32,000 of this relates to wages payable and $13,000 relates to payroll taxes. The entry to record these labor costs is a debit to
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- Fall '09
- Frank manufacturing