Job Order only - 15-4 The box in its lower right corner...

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Job Order Cost Flow The flow of costs (direct materials, direct labor, and manufacturing overhead) in job order cost  accounting parallels the physical flow of the materials as they are converted into finished goods. As  shown in Illustration  15-3 , companies assign manufacturing costs to the Work in Process Inventory  account. When a job is completed, the company transfers the cost of the job to Finished Goods  Inventory. Later when the goods are sold, the company transfers their cost to Cost of Goods Sold.  Illustration 15-3    Flow of costs in job order costing Illustration  15-3  provides a basic overview of the flow of costs in a manufacturing setting. A more  detailed presentation of the flow of costs is shown in Illustration 
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Unformatted text preview: 15-4 . The box in its lower right corner indicates two major steps in the flow of costs: (1) accumulating the manufacturing costs incurred, and (2) assigning the accumulated costs to the work done. As shown, the company accumulates manufacturing costs incurred in entries 1–3 by debits to Raw Materials Inventory, Factory Labor, and Manufacturing Overhead. When the company incurs these costs, it does not attempt to associate the costs with specific jobs. The remaining entries (entries 4–8) assign manufacturing costs incurred. In the remainder of this chapter, we will use a case study to explain how a job order cost system operates....
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.

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Job Order only - 15-4 The box in its lower right corner...

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