chap04 - David Franz, 2012 CHAPTER 4 - JOB COSTING I. Key...

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© David Franz, 2012 CHAPTER 4 - JOB COSTING I. Key Terms A. Cost Object is the cost of anything a company wants to collect the costs of, e.g. a product, a mile of highway, a client, a telephone line. The cost object can be very general or very specific. B. Direct cost can be traced directly to a cost object in an economically feasible way. C. Indirect cost can NOT be traced directly to a cost object in an economically feasible way but must be allocated to a cost object. D. Cost pool is a temporary grouping of indirect items that management wants combined into a single number before allocating to a cost object, e.g. employee health insurance, dental insurance, sick leave, and disability insurance are combined into one fringe benefit cost pool amount then allocated to a job. E. Cost allocation base is common denominator for linking an indirect cost pool with a cost object, e.g. allocate equipment maintenance costs to individual products using machine hours as the cost allocation base. II. Alternative Cost Accounting Systems A. Cost versus Benefit determines which costing system a firm chooses. B. Choice among systems for product costing and control purposes should reflect the nature of the underlying operations (not vice versa) 1
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C. Job Costing:
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This note was uploaded on 09/29/2011 for the course ACCT 305 taught by Professor Franz during the Spring '07 term at S.F. State.

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chap04 - David Franz, 2012 CHAPTER 4 - JOB COSTING I. Key...

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