Session 05 - Session 5 Job Cost Accounting for...

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Session 5Job Cost Accounting forManufacturing Firms
Manufacturing firms use the same basic approach to job costing as do service firms.However, for a manufacturer, the job costing problem is more complex because:
Source Documents for a Manufacturing JobFor the Job:A job cost sheet (accompanying the job as itpasses from one department to another), containing a record of:Direct materials costs (and types and quantities) traced to the jobDirect labor costs (and types and quantities) traced to the jobOverhead costs allocated to the jobNote that the job cost sheet corresponds to the subsidiary inventory account (in the ledger) used to record the cost associated with the jobFor Materials:a materials requisition recordFor Labor:a labor time record (perhaps, a time card)
Within the managerial accounting system, the basicrecords (accounts) needed to account for the firms production operations are relatively simple. What is needed is a subsidiary work-in-process inventory account for each job (corresponding to the job cost sheet):Job ZZCost of OH (Allocated)Cost of Direct Labor (Traced)Cost of Direct Materials (Traced)Job AAWORK-IN-PROCESS INVENTORY

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