ch03-instructor-AFM102s10

ch03-instructor-AFM102s10 - Managerial Accounting 3-1...

Info iconThis preview shows pages 1–9. 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
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Managerial Accounting 3-1 Chapter Three Systems Design: Job-Order Costing Managerial Accounting 3-2 Types of Product Costing Systems Process Costing Job-order Costing A company produces many units of a single A company produces many units of a single product. product. One unit of product is indistinguishable from One unit of product is indistinguishable from other units of product. other units of product. The identical nature of each unit of product The identical nature of each unit of product enables enables assigning the same average cost per unit. assigning the same average cost per unit. Managerial Accounting 3-3 Types of Product Costing Systems Process Costing Job-order Costing Many different products are produced each period. Many different products are produced each period. Products are manufactured to order. Products are manufactured to order. The unique nature of each order requires tracing or The unique nature of each order requires tracing or allocating costs to each job, and maintaining cost allocating costs to each job, and maintaining cost records for each job. records for each job. Managerial Accounting 3-4 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 Managerial Accounting 3-5 iClicker Question 1 The most likely difference in job-order costing between a service company and a manufacturing company would be: a. a service company would likely have lower direct material costs b. a manufacturing company would be more likely to use direct labour hours to apply manufacturing overhead c. there would be much lower amounts of overhead in a service company d. none of the above. Service companies (e.g., accounting firms, architects, law firms, etc.) use very little raw materials. Most of the costs in a service company are labour and overhead. Managerial Accounting 3-6 Accumulating Costs in a Job-Order Costing System THE JOB 1 Direct materials Direct labor T r a c e d d i r e c t l y t o e a c h j o b T r a c e d d i r e c t l y t o e a c h j o b Manufacturing overhead (OH) Applied to each job using a predetermined rate 1 A production batch or in non- manufacturing, a client. Managerial Accounting 3-7 Overhead Application: An Overview Overhead Pool Job 3 Job 2 Job 1 indirect materials indirect labour other MOH costs Managerial Accounting 3-8 The predetermined overhead rate (POHR) used to apply overhead to jobs is determined before the period begins. Manufacturing Overhead Application Budgeted total manufacturing overhead cost Budgeted total units in the allocation base (cost driver) POHR = Ideally, the allocation base is a cost driver that causes overhead....
View Full Document

This note was uploaded on 06/28/2011 for the course AFM 102 taught by Professor R.ducharme during the Spring '09 term at Waterloo.

Page1 / 47

ch03-instructor-AFM102s10 - Managerial Accounting 3-1...

This preview shows document pages 1 - 9. Sign up to view the full document.

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