ACTG 2020 Chapter 5 Job Order Costing.docx

ACTG 2020 Chapter 5 Job Order Costing.docx - ACTG 2020 –...

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ACTG 2020 – Chapter 5: Job Order Costing IMPORTANCE OF UNIT COSTING Importance of Unit Costs to Manufacturing Firms - Describe the differences between job-order costing and process costing and identify the types of firms that would use each method. - Cost accounting system: measures and assigns costs so that the unit cost of a product or service can be established - Cost of a product or Service: Three key elements o Direct materials o Direct labour o Overhead Job Order Production and Costing - Job: is one distinct unit or set of units. o Ex. Printing construction, furniture making, medical and dental services o cost of one job differs from that of another and must be tracked separately. - Job-order costing system: costs are assigned and accumulated by job NORMAL COSTING AND OVERHEAD APPLICA TION Actual Costing versus Normal Costing - Two methods used to measure the costs associated with production o 1. Actual costing o 2. Normal costing - 1. Actual cost system : only actual
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