week3 Master-WebCT-Job Order Costing

week3 Master-WebCT-Job Order Costing - Job Order Costing...

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Accy211: Management Accounting II Autumn Session 2009 Week 3 1 Job Order Costing Learning Objectives z Describe the building-block concepts of costing systems z Distinguish between job costing and process costing z Outline a seven-step approach to job costing z Distinguish actual costing from normal costing z Variations of normal costing z Track the flow of costs in a job-costing system z Account for end-of-period underallocated or overallocated indirect costs using alternative methods 2 z Cost Objects – including responsibility centers, departments, customers, products, etc. z Direct Costs and Tracing – materials and labor z Indirect Costs and Allocation – overhead z Cost Pool – any logical grouping of related cost objects z Cost-allocation Base – a cost driver is used as a basis upon which to build a systematic method of distributing indirect costs (for example if direct labor hours cause indirect costs to change, then direct labor hours may be used as the allocation base to allocate indirect costs among objects. Building-Block Concepts of Costing Systems 3 A cost-allocation base may be any of the following except a (A) cost driver. (B) cost pool. (C) way to link indirect costs to a cost object. (D) nonfinancial quantity. Quiz - 1 4 z Job-Costing: system accounting for distinct cost objects called Jobs. Each job may be different from the next, and consumes different resources Wedding announcements Aircraft advertising z Process-Costing: system accounting for mass production of identical or similar products Oil refining, orange juice Types of Product-Costing Systems 5 ± Used for production of small, identical, low cost items. ± Mass produced in automated continuous production process. ± Costs cannot be directly traced to each unit of product. ± Typical process cost applications: ± Petrochemical refinery ± Paint manufacturer ± Paper mill Process Costing 6 Page 1 of 12
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± Used for production of large, unique, high-cost items. ± Built to order rather than mass produced. ± Many costs can be directly traced to each job. ± Job-shop operations--Products manufactured in very low volumes or one at a time. ± Batch-production operations Multiple products in batches of relatively small quantity. ± Typical job-order cost applications: Special-order printing, Building construction, Also used in service industry—Hospitals, Law firm. Job Order Costing 7 A company that manufactures dentures for use by local dentists would use A) process costing. B) personal costing. C) operations costing. D) job costing. Quiz - 2 8 Costing Systems Illustrated 9 Job Order Costing 10 Seven-Step Approach to Job Costing Step 1: Identify the chosen cost object. Step 2: Identify the direct costs of the job. Step 3: Select the cost-allocation bases.
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week3 Master-WebCT-Job Order Costing - Job Order Costing...

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