Notes Chapter 3 - Systems Design Job Order Costing...

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Systems Design: Job Order Costing Absorption Costing: all manufacturing costs, fixed and variable, are assigned to units of product; units are said to “fully absorb manufacturing costs” I. Process and Job-Order costing a. Process Costing a.i. Process costing system: company produces many units of a single product for long periods. CONTINUOUS BASIS a.i.1. ex. Paper at Weyerhaeuser, beverages at Coca Cola a.ii. Unit product cost = total manu. Cost/total units produced b. Job-Order Costing b.i. Job-order costing system: many different products are produced each period DIVERSE OUTPUTS b.i.1. Ex. Greeting cards from Hallmark, construction projects by Bechtel Intl. II. Job-Order Costing—An Overview a. Measuring Direct Materials Cost a.i. Bill of materials: document that lists the type and quantity of each type of direct material needed to complete a unit of product. a.ii. Production order: issued when an agreement has been reached with the customer concerning the quantities, prices, and shipment date for the order. a.iii. Materials requisition form: detailed source document that specifies the type and quantity of materials to be drawn from the storeroom and identifies the job that will be charged for the cost of the materials. a.iii.1. Used to control the flow of materials and make entry into acct. records b. Job Cost Sheet b.i. Job cost sheet: records the materials, labor, and manufacturing overhead costs charged to that job.
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