20 - Presentation Deck - ACC 212: PRINCIPLES OF ACCOUNTING...

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Prepared by: Jill Mitchell, Assistant Professor, NOVA Reference: Weygandt, Jerry, Kieso, and Kimmel. Accounting Principles Unless noted, illustrations are from the referenced text. ACC 212: PRINCIPLES OF ACCOUNTING CHAPTER 20: JOB ORDER COST ACCOUNTING PRESENTATION DECK
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Chapter 20-2 20: Job Order Cost Accounting 1. Cost Accounting Systems 2. Job Order Cost Flow 1.1 Explain the characteristics and purposes of cost accounting 2.2 Describe the flow of costs in a job order cost accounting system 2.3 Journalize the accumulation of costs, assignment of costs to work in process, assignment of costs to finished goods and cost of goods sold. 2.4 Indicate how the predetermined overhead rate is determined and used. 2.5 Distinguish between under and over- applied overhead and how it is treated at year-end.
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Chapter 20-3 1.1 Explain the characteristics and purposes of cost accounting Definitions: Cost Accounting - An area of accounting that involves measuring, recording and reporting product costs . Cost Accounting System Manufacturing cost accounts that are fully integrated into the general ledger of a company.* Two types: 1) Job Order Cost System 2) Process Cost System (Chapter 21) * An important feature of a cost accounting system is the use of a perpetual inventory system which provides immediate, up-to-date information on the cost of a product. Cost Accounting Systems
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Chapter 20-4 Jobs Won, Money Lost Many companies suffer from poor cost accounting. As a result, they sometimes make products they should not be selling at all, or they buy other products that they could more profitably make themselves. Also, inaccurate cost data lead companies to misallocate capital and frustrate efforts by plant managers to improve efficiency. For example, consider the case of a diversified company in the business of rebuilding diesel locomotives. The managers thought they were making money, but a consulting firm found that the company had seriously underestimated costs. The company bailed out of the business, and not a moment too soon. Says the consultant who advised the company, “The more contracts it won, the more money it lost.” Given that situation, a company cannot stay in business very long! What type of costs do you think the company had been underestimating? Source: Weygandt, Jerry, Kieso, and Kimmel. Accounting Principles . 9th edition. USA: John Wiley & Sons, Inc., 2009.
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20-5 Job Order Cost System 1.1 Explain the characteristics and purposes of cost accounting The company assigns costs to each job or each batch of goods. The job or batch may fill a specific customer order or replenish inventory. Each job/batch has its own distinguishing characteristics. The system measures costs for each completed job
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This note was uploaded on 02/28/2011 for the course ACC 212 taught by Professor Mitchell during the Spring '11 term at Northern Virginia Community College.

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20 - Presentation Deck - ACC 212: PRINCIPLES OF ACCOUNTING...

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