ch3 - Managerial Accounting Chapter Three Job Order Costing...

Managerial Accounting
Chapter Three - Job Order Costing

Chapter Three Highlights

Process vs Job Order Costing
(JOC)

ID Documents used in JOC

Compute Overhead Rates

Journal entries related to JOC
including Direct Materials, Direct
Labor, Mfg Overhead

Calculation of under/over applied
overhead

Costing Systems

Unit cost are important
for budgeting,
operational control,
product line decisions,
and for setting selling
prices of goods or
services

2 types of costing
system provide unit
costs: process costing
and job order costing

Process Costing

System used when a
single homogeneous
product is produced

total Mfg cost for a
period of time is
divided by total units
produced = per unit
cost

example: cement
producers would use a
process cost system

Job Order Costing

Used when a company
produces a variety of
products in different
batches (i.e.. Movie
studios)

costs are assigned to
each project

example: custom home
builder would use a job
order costing system

Job Order Costing - The Details

A job cost sheet is used to collect the
details of the costs incurred on a specific
job

This sheet includes a project name and
identifying number

Also included on this sheet would be the
details of the DM, DL and overhead costs
assigned to the completed the project

Materials Cost

A materials
requisition form filled
out to withdraw
materials out of raw
materials store area

slip identifies the type
of materials taken and
quantity

Also included is the
job identifier

Materials Cost

requisitions can be
used to record
materials cost

note: indirect
materials are charged
to general Mfg
overhead

Direct Labor Costs

Time sheets are used
to track employee(s)