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Cost Accounting Systems - CHAPTER 2 JOB ORDER COST...

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CHAPTER 2 JOB ORDER COST ACCOUNTING Study Objectives Explain the characteristics and purposes of cost accounting. Describe the flow of costs in a job order cost accounting system. Explain the nature and importance of a job cost sheet.
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Study Objectives: Continued Indicate how the predetermined overhead rate is determined and used. Prepare entries for jobs completed and sold. Distinguish between under- and over-applied manufacturing overhead.
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COST ACCOUNTING SYSTEMS Study Objective 1 Cost accounting involves The measuring The recording , and The reporting of product costs Consists of the various manufacturing costs that are fully integrated into the general ledger system. An important feature is the use of a perpetual inventory system to provide immediate, up-to-date information on the cost of a product.
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COST ACCOUNTING SYSTEMS There are two basic types of cost accounting systems: and
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COST ACCOUNTING SYSTEMS Job Order Cost System Costs are assigned to each job or batch A job may be for a specific order or inventory A key feature: Each job or batch has its own distinguishing characteristics The objective: to compute the cost per job Measures costs for each job completed - not for set time periods
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COST ACCOUNTING SYSTEMS Job Order Cost System
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COST ACCOUNTING SYSTEMS Process Cost System Used when a large volume of similar products are manufactured. Cereal Automobiles Compact Discs Paint Cost are accumulated for a specific time period (a week or a month) Costs are assigned to departments or processes for a set period of time.
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COST ACCOUNTING SYSTEMS Process Cost System
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JOB ORDER COST FLOWS Study Objective 2 The cost flow parallels the physical flow of the materials as they are converted into finished goods. Manufacturing costs are assigned to Work in Process. Cost of completed jobs is transferred to Finished Goods Inventory. When units are sold, the cost is transferred to Cost of Goods Sold.
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JOB ORDER COST FLOWS Overview
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JOB ORDER COST FLOWS System
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Two Major Steps in Flows of Costs Accumulate the manufacturing costs incurred Raw materials Factory Labor Manufacturing Overhead Assign the accumulated costs to the work done
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ACCUMULATING MANUFACTURING COSTS Raw Materials Costs Raw materials are debited to Raw Materials Inventory when purchased.
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