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Class_5_MGR - MANAGERIAL ACCOUNTING IIE 211 CLASS 5 Korea U...

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MANAGERIAL ACCOUNTING - IIE 211 CLASS 5 Korea U Intranet http://iie.korea.ac.kr/intranet/ Garrison Text Site www.mhhe.com/ garrison11e eBook Text Site http://ebooks.primisonline.com CLASS TOPICS (NOTES) 1. Review Chapter 3 2. Review Exercise 3-1 JOB v PROCESS (INTL EDITION 3-1) 3. Review Exercise 3-3 PREDETERMINED OH RATE (INTL EDITION 3-5) 4. HW Exercise 3-6 (INTL EDITION Exercise 3-12) STUDENT ID NUMBER REQD DUE CLASS 6 _ WEDNESDAY (7/11) 1. Introduction Chapter 5 Cost Behavior 2. HW Exercise 5-1 (INTL 5-2) 3. HW Exercise 5-2 (INTL 5-11)
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MANAGERIAL ACCOUNTING - IIE 211 CLASS 5 CHAPTER 3 Systems Design—Job-Order Costing Chapter Overview A. Costing Systems. ( Exercise 3-1 ) Two major types of costing systems are used in manufacturing and many service companies: process costing and job-order costing. 1. Process Costing. A process costing system is used where a single, homogeneous product or service is produced. In a process costing system, total manufacturing costs are divided by total number of units produced during a given period. The unit cost that results is a broad, average figure. Process costing is used in industries such as cement, flour, brick, and oil refining. 2. Job-Order Costing. Job-order costing is used when different types of products, jobs, or batches are produced within a period. In a job-order costing system, direct materials costs and direct labor costs are usually traced directly to jobs. Overhead is applied to jobs using a predetermined rate. Actual overhead costs are not traced to jobs. Examples of industries in which job-order costing is used include special order printing, shipbuilding, construction, hospitals, professional services such as law firms, and movie studios. Note that in some situations either job-order costing or process costing could be used, depending on the level of detail needed and the desires of management. B. Job-Order Costing—An Overview. (Exercise 3-3) The discussion in the text and below assumes that a paper-based manual system is used for recording costs. Cost and other data are recorded on materials requisition forms, time tickets, and job cost sheets. Of course, many companies now enter cost and other data directly into computer databases and have dispensed with these paper documents. Nevertheless, the data residing in the computer typically consists of a “virtual” version of the manual system. Since a manual system is easy for students to understand, we continue to rely on it when describing a job-order costing system. 1. Job Cost Sheet. Each job has its own job cost sheet on which costs are charged to the job. The job cost sheet will have some code or descriptive data to identify the particular job and will contain spaces to record costs of materials, labor, and overhead. Exhibit 3-4 provides an illustration of a job cost sheet.
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