Job+Costing+Handout+_1[1] - Chapter 17 Job Order Costing...

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Chapter 17 Job Order Costing Chapter 17 shows the use of several major types of cost accounting systems. All companies have to accumulate and allocate costs. Each company has to decide how it is going to do that. Companies pick a method that works well for them, and is cost effective. Accounting isn't hard; students just like to make it seem that way. Accounting is simply a way to organize information, and make it useful for the people who have to manage a business, and make decisions. Managerial accounting reports don't have to follow GAAP because they are prepared for managers, not outside investors or creditors. A well designed accounting system should generate reports for a large variety of uses. Of course, it must provide the necessary information for annual financial statements; and it should also help in the preparation of special reports, like sales tax and payroll reports. It should help managers track and manage inventories, open orders, accounts receivable and accounts payable. Managers must make decisions on a daily basis. Annual financial statements are prepared well after the end of the year, and are useless for managing a businesses daily affairs. Managers must look forward to the near future, usually the coming week, month and year. Annual financials look backwards in time. The basic concepts and terms you learned in Chapter 16 will carry over through this chapter and the remainder of the course. Businesses use these concepts to prepare managerial reports, and analyze their business activities. There are two main types of cost accounting systems. Companies select a method that best matches the flow of work in their business. These methods are used to allocate all production costs: labor, materials and overhead. Job order costing - work is broken into jobs; each job is tracked separately auto mechanics, carpenters, painters, print shops, computer repair Process costing - a large quantity of identical or similar products are mass produced auto assembly plants, hot dog manufacturing, any large mechanized production facility Each cost accounting system gathers and reports on the same information. The method used depends on the needs of the business.
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This note was uploaded on 12/03/2009 for the course ACCT 315 taught by Professor Siebert during the Fall '09 term at Saginaw Valley.

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Job+Costing+Handout+_1[1] - Chapter 17 Job Order Costing...

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