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Unformatted text preview: CHAPTER 17 (FIN MAN); CHAPTER 2 (MAN) JOB ORDER COSTING EYE OPENERS 1. Product cost information is used by man- agers to (1) establish product prices, (2) control operations, and (3) develop financial statements. 2. a. Job order cost system and process cost system. b. The job order cost system provides a separate record of each quantity of product that passes through the factory. c. Process cost systems accumulate costs for each department or process within a factory. 3. Job order costing is used by firms that sell custom goods and services to customers. The job order system is frequently associ- ated with firms that will produce a product or service specifically to a customer order. 4. No. A job order cost system is not appropri- ate because workers could not physically differentiate between the products being worked on in different orders. 5. Work in Process 6. Materials should not be issued by the store- keeper without a properly authorized materi- als requisition. Both the storekeeper and the recipient of the materials should initial the materials requisition when the materials are issued to indicate release of the proper amount of materials from the storeroom. 7. a. Purchase invoice or receiving report b. Materials requisition 8. A job cost sheet is the subsidiary ledger to the work in process control account. The cost of materials, labor, and overhead are listed on the job cost sheet for each job. A summary of all the job cost sheets during an accounting period is the basis for journal entries to the control accounts. 9. a. The clock card is a means of recording the hours spent by employees in the factory. The time ticket is a means of re- cording the time the employee spends on a specific job or, in cases of indirect labor (factory overhead), the department in which the time was spent. b. The total time reported on an employee’s time tickets for a payroll period is com- pared with the time reported on the em- ployee’s clock cards as an internal check on the accuracy of payroll disbursements. 10. The sources of the debits to Work in Pro- cess are: a. Summary of the materials requisitions for direct materials. b. Summary of the time tickets for direct labor. c. Data obtained when applying the prede- termined factory overhead rate for fact- ory overhead. 11. The use of a predetermined factory over- head rate in job order cost accounting as- sists management in pricing jobs. By estim- ating the cost of direct materials and direct labor based on past experience and by ap- plying the factory overhead rate, the cost of a job can be estimated. The predetermined rate also permits the determination of the cost of a job shortly after it is finished, which enables management to adjust future pricing policies to achieve the best combination of revenue and expense....
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- Spring '09
- Cost Accounting, ........., Supply chain management terms