Ch02 - 2-1 Chapter 2 Systems Design: Job-Order Costing...

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2-1 Chapter 2 Systems Design: Job-Order Costing Learning Objective 1 Distinguish between process costing and job-order costing and identify companies that would use each costing method . Types of Product Costing Systems Process Costing Job-order Costing v A company produces many units of a single product. v One unit of product is indistinguishable from other units of product. from other units of product. v The identical nature of each unit of product enables assigning the same average cost enables assigning the same average cost per unit.
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2-2 Types of Product Costing Systems Process Costing Job-order Costing Example companies: Example companies: 1. Weyerhaeuser (paper manufacturing) 1. Weyerhaeuser (paper manufacturing) 2. Reynolds Aluminum (refining aluminum ingots) 2. Reynolds Aluminum (refining aluminum ingots) 3. Coca 3. Coca -Cola (mixing and bottling beverages) Cola (mixing and bottling beverages) Types of Product Costing Systems Process Costing Job-order Costing v Many different products are produced each Many different products are produced each period. v Products are manufactured to order. Products are manufactured to order. v The unique nature of each order requires The unique nature of each order requires tracing or allocating costs to each job, and maintaining cost records for each job. Types of Product Costing Systems Process Costing Job-order Costing Example companies: Example companies: 1. Boeing (aircraft manufacturing) 1. Boeing (aircraft manufacturing) 2. Bechtel International (large scale construction) 2. Bechtel International (large scale construction) 3. Walt Disney Studios (movie production) 3. Walt Disney Studios (movie production)
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2-3 Comparing Process and Job-Order Costing Job-Order Process Number of jobs worked Many Single Product Cost accumulated by Job Department Average cost computed by Job Department Quick Check ü Which of the following companies would be likely to use job-order costing rather than process costing? a. Scott Paper Company for Kleenex. b. Architects. c. Heinz for ketchup. d. Caterer for a wedding reception. e. Builder of commercial fishing vessels. Which of the following companies would be likely to use job-order costing rather than process costing? a. Scott Paper Company for Kleenex. b. Architects. c. Heinz for ketchup. d. Caterer for a wedding reception. e. Builder of commercial fishing vessels. Quick Check ü
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2-4 Manufacturing Overhead Job No. 1 Job No. 2 Job No. 3 Charge Charge direct material and material and direct labor costs to costs to each job as work is work is performed. Job-Order Costing—An Overview Direct Materials Direct Labor Manufacturing Manufacturing Overhead, Overhead, including indirect materials materials and and indirect labor , , are allocated to jobs rather than jobs rather than directly traced directly traced to each job.
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This note was uploaded on 06/21/2011 for the course MGMT 202 taught by Professor Yan during the Spring '11 term at Nanjing University.

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Ch02 - 2-1 Chapter 2 Systems Design: Job-Order Costing...

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