Chapter_21_LO_1,2,3 - Chapter 21 Costing Systems: Job Order...

Info iconThis preview shows pages 1–12. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 21 Costing Systems: Job Order and Process Costing Product Cost Information and the Management Cycle Objective 1 Discuss the role information about costs plays in the management cycle and explain why unit cost is important Product Cost Information and the Management Cycle Role of the management accountant Develop a management information system that provides managers with the cost information they need Managers rely on relevant and reliable cost information Relevant? If able to affect what decision we make. Reliable? If accurate, verifiable. Relevance and reliability are the two primary characteristics of accounting information (from the Conceptual Framework of Accounting from last semester). The two secondary characteristics are comparability and consistency . Conceptual Framework of Accounting Relevance: composed of Predictive Value, Feedback Value, and Timeliness Reliability: composed of Verifiability, Representational Faithfulness, and Neutrality Job Order Versus Process Costing Objective 2 Distinguish between the two basic types of product costing systems and identify the information each provides Job Order Versus Process Costing An organization must earn a profit in order to succeed Must sell its products or services at prices that exceed the costs of creating (these are product / manufacturing / inventoriable costs, which will become COGS) and delivering them (these are operating costs, i.e. SG&A) Requires extensive information about such product-related costs as setup, production, and distribution Requires a highly reliable product costing system specifically designed to record and report the organization's operations Job Order Versus Process Costing (contd) Two basic types of product costing systems Job order costing system Process costing system Job Order Costing System Used by companies that make large, unique, or special-order products Customized publications, specially built cabinets, made-to-order draperies, custom- tailored suits Uses a single Work in Process Inventory account Job Order Costing System (contd) The costs of materials, labor, and manufacturing overhead are traced to and assigned to a specific job order or batch of products Job order A customer order for a specific number of specially designed, made-to-order products Batch of products A set of jobs to be processed in a single run Costs are traced using a subsidiary ledger of job order cost cards Job Order Costing System (contd) Job order cost card A document on which all costs incurred in the production of a particular job order are recorded These costs are used to measure the cost of each completed unit Process Costing System Used by companies that have long, continuous production runs of identical products Paint, candy, soft drinks, bricks, paper Uses several Work in Process Inventory accountsone for each process, department, or work cell Process Costing System...
View Full Document

Page1 / 52

Chapter_21_LO_1,2,3 - Chapter 21 Costing Systems: Job Order...

This preview shows document pages 1 - 12. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online