Chapter 3 - Product Costing Systems There are two product...

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Product Costing Systems There are two product costing systems: Job cost – for unique or customized products, like mansions Both allocate direct materials and direct labor to production Job cost problems focus on overhead allocation Process cost problems focus on assigning costs based on equivalent units to ending inventory and cost of goods manufactured.
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Job Cost System In a job cost system, overhead is allocated by applying (multiplying) a pre-determined overhead rate by the cost driver actually used during the period. The pre-determined overhead rate is the total estimated overhead (at the beginning of the period) divided by some cost driver (in units). Because estimated rates are used, applied overhead will nearly always be different from actual overhead. This over/under applied overhead is cleared to cost of goods sold at the end of every period.
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Key Job Cost Documents Materials requistition Time Sheet Overhead Schedule Job Cost Card Example: Purchase Order
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This note was uploaded on 03/27/2012 for the course ACCT 2302 taught by Professor Shall during the Spring '08 term at Texas A&M University, Corpus Christi.

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Chapter 3 - Product Costing Systems There are two product...

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