Chapter 4 - Job Costing

Chapter 4 - Job Costing - Chapter 4: Job Costing I....

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Chapter 4: Job Costing I. Building-Block Concepts of Costing Systems a. Cost Object: i. Anything for which a measurement of costs is desired b. Direct costs of a cost object: i. Costs related to a particular cost object that can be traced to that cost object in an economically feasible way 1. Traced to the cost object c. Indirect costs of a cost object: i. Costs related to a particular cost object that cannot be traced to that cost object in an economically feasible way 1. Cost allocation d. Cost Pool: i. A grouping of individual indirect cost items 1. Often organized in conjunction with cost-allocation bases a. Cost-Allocation Base: i. A systematic way to link an indirect cost or group of indirect costs to a cost object e. Managers and management accountants choose cost objects to help make decisions i. Major type of cost object is a responsibility center 1. Part, segment, or subunit of an organization whose manager is accountable for specified activities a. Most common is a department II. Job-Costing and Process-Costing Systems a. Job-Costing System: i. Job:
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1. Cost object that is a unit or multiple of units of a distinct product or service ii. Accumulate costs separately for each product or service b. Process-Costing System: i. The cost object is masses of identical or similar units of a product or service 1. Divides the total costs of producing an identical or similar product or service by the total number of units produced to obtain a per-unit cost III. Actual Costing a. Actual Costing: i. A system that traces direct costs to a cost object by using the actual direct- cost rates times the actual quantities of the direct-cost inputs
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Chapter 4 - Job Costing - Chapter 4: Job Costing I....

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