HDFChapter4Solutions12e - CHAPTER 4 JOB COSTING 4-1 Cost...

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CHAPTER 4 JOB COSTING 4-1 Cost pool ––a grouping of individual cost items. Cost tracing ––the assigning of direct costs to the chosen cost object. Cost allocation ––the assigning of indirect costs to the chosen cost object. Cost-allocation base–– a factor that links in a systematic way an indirect cost or group of indirect costs to a cost object. 4-2 In a job-costing system, costs are assigned to a distinct unit, batch, or lot of a product or service. In a process-costing system, the cost of a product or service is obtained by using broad averages to assign costs to masses of identical or similar units. 4-8 Two reasons for using an annual budget period are a. The numerator reason––the longer the time period, the less the influence of seasonal patterns, and b. The denominator reason––the longer the time period, the less the effect of variations in output levels on the allocation of fixed costs. 4-9 Actual costing and normal costing differ in their use of actual or budgeted indirect cost rates: Actual Costing Normal Costing Direct-cost rates Indirect-cost rates Actual rates Actual rates Actual rates Budgeted rates Each costing method uses the actual quantity of the direct-cost input and the actual quantity of the cost-allocation base. 4.16 (10 min) Job order costing, process costing. a. Job costing l. Job costing b. Process costing m. Process costing c. Job costing n. Job costing d. Process costing o. Job costing e. Job costing p. Job costing f. Process costing q. Job costing g. Job costing r. Process costing h. Job costing (but some process costing) s. Job costing i. Process costing t. Process costing j. Process costing u. Job costing k. Job costing 4-18 (20 -30 min.) Job costing, normal and actual costing. 4-1
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1. Budgeted indirect- cost rate = Budgeted indirect costs Budgeted direct labor-hours = hours 160,000 $8,000,000 = $50 per direct labor-hour Actual indirect- cost rate = Actual indirect costs Actual direct labor-hours = hours 164,000 $6,888,000 = $42 per direct labor-hour These rates differ because both the numerator and the denominator in the two calculations are different—one based on budgeted numbers and the other based on actual numbers. 2a. Laguna Model Mission Model Normal costing Direct costs Direct materials Direct labor Indirect costs Assembly support ($50 × 900; $50 × 1,010) Total costs $106,450 36,276 142,726 45,000 $187,726 $127,604 41,410 169,014 50,500 $219,514 2b. Actual costing Direct costs Direct materials Direct labor Indirect costs Assembly support ($42 × 900; $42 × 1,010) Total costs $106,450 36,276 142,726 37,800 $180,526 $127,604 41,410 169,014 42,420 $211,434 3. Normal costing enables Anderson to report a job cost as soon as the job is completed, assuming that both the direct materials and direct labor costs are known at the time of use. Once the 900 direct labor-hours are known for the Laguna Model (June 2007), Anderson can compute the $187,726 cost figure using normal costing. Anderson can use this information to manage the costs of the Laguna Model job as well as to bid on similar jobs later in the year. In contrast, Anderson has to wait until the December 2007 year-end to compute the $180,526 cost of the Laguna Model using actual costing.
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This note was uploaded on 08/11/2009 for the course ACCT 612 taught by Professor Jamesswanson during the Spring '09 term at Univ. of Massachusetts Med. School.

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HDFChapter4Solutions12e - CHAPTER 4 JOB COSTING 4-1 Cost...

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