Consider a service or manufacturing business that could or should use job order costing systems. How would it be used and what benefits could it provide to the organization? Which account is used in the job order cost system to accumulate production costs for individual jobs? Please be specific in your discussion.
Chapter 2
Job Order
Costing
Learning Objectives
• Obj. 1: Describe cost accounting systems used
by manufacturing businesses.
• Obj. 2: Describe and illustrate a job order cost
accounting system for a manufacturing business.
• Obj. 3: Describe job order cost accounting
systems for service businesses.
• Obj. 4: Describe the use of job order cost
information for decision-making.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Cost Accounting Systems Overview
(slide 1 of 4)
Measure, record, and
report product costs
Cost
accounting
systems
Job order cost
systems
Process cost
systems
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Cost Accounting Systems Overview
(slide 2 of 4)
Uses of product
costs
Setting product
prices
Controlling
operations
Developing
financial
statements
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Cost Accounting Systems Overview
(slide 3 of 4)
• A job order cost system provides product costs for each
quantity of product that is manufactured.
o Each quantity of product that is manufactured is
called a job.
• Job order cost systems are often used by companies
that manufacture custom products for customers or
batches of similar products.
o Manufacturers that use a job order cost system are
sometimes called job shops.
▪ Examples of job shops:
– Apparel manufacturer
– Guitar manufacturer
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Cost Accounting Systems Overview
(slide 4 of 4)
• A process cost system provides product
costs for each manufacturing department or
process.
• Process cost systems are often used by
companies that manufacture units of a
product that are indistinguishable from each
other and are manufactured using a continuous
production process.
o Examples: oil refineries, paper producers, chemical
process, food processors
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Summary of Legend Guitars’ Manufacturing
Operations
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Job Order Cost Systems for Manufacturing
Businesses (slide 1 of 2)
• A job order cost system records and
summarizes manufacturing costs by jobs.
o While jobs are still in the production process, they are
part of the Work in Process Inventory.
o When jobs are completed, they become part of the
Finished Goods Inventory.
o When the finished goods are sold to customers, their
costs become part of the Cost of Goods Sold.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Flow of Manufacturing Costs
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Job Order Cost Systems for Manufacturing
Businesses (slide 2 of 2)
• In a job order cost accounting system, perpetual
inventory controlling accounts and subsidiary
ledgers are maintained for materials, work in
process, and finished goods inventories.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Inventory Ledger Accounts
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Materials
(slide 1 of 6)
• The materials account in the general ledger is a
controlling account. A separate account for
each type of material is maintained in a
subsidiary materials ledger.
Materials ledger account
Increases (debits) are
based on receiving reports,
which is supported by the
supplier’s invoice
Decreases (credits) are
based on materials
requisitions
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Materials Information and Cost Flows
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Materials
(slide 2 of 6)
• A receiving report is prepared when materials
that have been ordered are received and
inspected.
• The quantity received and the condition of the
materials are entered on the receiving report.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Materials
(slide 3 of 6)
• When the supplier’s invoice is received, it is
compared to the receiving report.
• If there are no discrepancies, a journal entry is
made to record the purchase.
o The journal entry to record the supplier’s invoice
related to Receiving Report No. 196 (see Slide 12) is
as follows:
Materials
Accounts payable
10,500
10,500
Materials purchased during December
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Materials
(slide 4 of 6)
• The storeroom releases materials for use in
manufacturing when a materials requisition is
received.
• The materials requisitions for each job serve as
the basis for recording materials used.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Materials
(slide 5 of 6)
• For direct materials, the quantities and amounts
from the materials requisitions are posted to job
cost sheets.
o Job cost sheets make up the work-in-process
subsidiary ledger.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Materials
(slide 6 of 6)
• A summary of the materials requisitions is used
as a basis for the journal entry recording the
materials used for the month.
o For direct materials, this entry increases (debits)
Work in Process and decreases (credits) Materials.
▪ The journal entry to record the direct materials used for the
month for Legend Guitars (see Slide 12) is as follows:
Work in process
Materials
13,000
13,000
Materials requisitioned to jobs
($2,000 ÷ $11,000)
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Factory Labor
(slide 1 of 2)
• When employees report for work, they may use
electronic badges, clock cards, or in-and-out
cards to clock in.
• When employees work on an individual job,
they use time tickets to record the amount of
time they have worked on a specific job.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Labor Information and Cost Flows
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Factory Labor
(slide 2 of 2)
• A summary of the time tickets is used as the
basis for the journal entry recording direct labor
for the month.
o This entry increases (debits) Work in Process and
increases (credits) Wages Payable.
▪ The journal entry to record direct labor for the month for
Legend Guitars (see Slide 20) is as follows:
Work in process
Wages payable
11,000
11,000
Factory labor used in production of
jobs ($3,500 ÷ $7,500)
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Factory Overhead
(slide 1 of 2)
• Factory overhead includes all manufacturing
costs except direct materials and direct labor.
• Factory overhead costs come from a variety of
sources, including the following:
o Indirect materials come from a summary of materials
requisitions.
o Indirect labor comes from the salaries of production
supervisors and the wages of other employees such
as janitors.
o Factory power comes from utility bills.
o Factory depreciation comes from the Accounting
Department computations of depreciation.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Factory Overhead
(slide 2 of 2)
• Assume that Legend Guitars incurred $4,600 of
overhead during December, which included $500 of
indirect materials, $2,000 of indirect labor, $900 of
utilities, and $1,200 of factory depreciation. The $500 of
indirect materials consisted of $200 of glue and $300 of
sandpaper. The entry to record the factory overhead is
as follows:
Factory overhead
Materials
4,600
500
Wages payable
2,000
Utilities payable
900
Accumulated depreciation
1,200
Factory overhead incurred in production
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Check Up Corner
•
Direct Materials, Direct Labor, and
Factory Overhead Costs
Grayson Company is a manufacturer that uses a job order cost system.
The following data summarize the operatons related to producton for
January, the frst month of operatons:
a. Purchased 400 units of materials at $14 per unit on account.
b. Requisitoned materials for producton as follows:
▪ 200 units for Job 101 at $12 per unit.
▪ 300 units for Job 102 at $14 per unit.
c. Accumulated direct labor cost as follows:
▪ 700 hours of direct labor on Job 101 at $16 per hour.
▪ 600 hours of direct labor on Job 102 at $12 per hour.
d. Incurred factory overhead costs as follows: indirect materials, $800; indirect
labor, $3,400; utlites cost, $1,600; and factory depreciaton, $2,500.
•
Journalize the entries to record these transactons.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Check Up Corner
a.
Materials
Work in process
Work in process
Requisiton of materials
6,600
6,600
18,400
Wages payable
d. Factory overhead
Materials
400 units × $14 per unit
5,600
Materials
c.
Purchase of materials
5,600
Accounts payable
b.
Direct Materials, Direct Labor, and
Factory Overhead Costs Solution
18,400
Job 101
Job 102
Total
Qty.
200 ×
300 ×
Price
$12 =
$14 =
Total cost
$2,400
$4,200
$6,600
Direct labor cost
8,300
800
Wages payable
3,400
Utilities payable
1,600
Accumulated
depreciation—factory
2,500
Job 101
Job 102
Total
Hours
Rate
700 × $16 =
600 × $12 =
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Total cost
$11,200
$7,200
$18,400
Allocating Factory Overhead
(slide 1 of 2)
• Factory overhead is different from direct labor
and direct materials in that it is indirectly
related to the jobs. Factory overhead costs
cannot be identified with or traced to
specific jobs. For this reason, factory
overhead costs are allocated to jobs.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Allocating Factory Overhead
(slide 2 of 2)
•
The process by which factory overhead or other costs are
assigned to a cost object, such as a job, is called cost
allocation.
o The factory overhead costs are allocated to jobs using a
common measure related to each job.
▪ This measure is called an activity base, allocation base,
or activity driver.
– Three common activity bases used to allocate factory
overhead costs are as follows:
1. Direct labor hours
2. Direct labor cost
3. Machine hours
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Predetermined Factory Overhead Rate
(slide 1 of 3)
• Factory overhead costs are normally allocated
or applied to jobs using a predetermined
factory overhead rate.
• The predetermined factory overhead rate is
computed as follows:
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Predetermined Factory Overhead Rate
(slide 2 of 3)
• Assume that Legend Guitars estimates the total
factory overhead cost as $50,000 for the year
and the activity base as 10,000 direct labor
hours. The predetermined factory overhead rate
is computed as follows:
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Predetermined Factory Overhead Rate
(slide 3 of 3)
Activity-based
costing
Method for
accumulating and
allocating factory
overhead costs
Uses a different
overhead rate for
each type of factory
overhead activity
Inspecting, moving,
and machining
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Applying Factory Overhead to Jobs
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Applying Factory Overhead to Work in Process
(slide 1 of 5)
• Using a factory overhead rate of $5 per direct
labor hour, $4,250 of factory overhead is applied
as follows:
Time tickets
Direct labor
hours
Factory overhead
rate
Factory overhead
applied
Job 71
350
$5
$1,750 (350 hrs. × $5)
Job 72
500
$5
$2,500 (500 hrs. × $5)
Total
850
$4,250
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Applying Factory Overhead to Work In Process
(slide 2 of 5)
• The journal entry to apply factory overhead
increases (debits) Work in Process and
decreases (credits) Factory Overhead.
o The journal entry to apply overhead to Jobs 71 and 72
is as follows:
Work in process
Factory overhead
4,250
4,250
Factory overhead applied to jobs
according to the predetermined overhead
rate (850 hrs. × $5)
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Applying Factory Overhead to Work in Process
(slide 3 of 5)
• The factory overhead account is:
o Increased (debited) for the actual overhead costs
incurred.
o Decreased (credited) for the applied overhead.
• The actual and applied overhead usually differ
because the actual overhead costs are normally
different from the estimated overhead costs.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Applying Factory Overhead to Work in Process
(slide 4 of 5)
• Depending on whether actual overhead is greater or less
than applied overhead, the factory overhead account will
either have a debit or credit ending balance as follows:
o If the applied overhead is less than the actual overhead incurred,
the factory overhead account will have a debit balance.
▪ This debit balance is called underapplied factory overhead or
underabsorbed factory overhead.
o If the applied overhead is more than the actual overhead
incurred, the factory overhead account will have a credit balance.
▪ This debit balance is called overapplied factory overhead or
overabsorbed factory overhead.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Applying Factory Overhead to Work in Process
(slide 5 of 5)
• The factory overhead account for Legend Guitars, which
follows, illustrates both underapplied and overapplied
factory overhead.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Check Up Corner
Applying Overhead and Determining Job
Cost
•
Grayson Company estmates that total factory overhead costs will be $100,000 for
the year. Direct labor hours are estmated as 25,000 for the year. The company has
two completed jobs at the end of January, Jobs 101 and 102. The direct labor
hours and units produced for these jobs are as follows:
Direct labor hours
Units produced
Job 101
700
500
Job 102
600
1,000
a. Using the informaton provided, determine:
▪ The predetermined factory overhead rate using direct labor hours as the actvity
base.
▪ The amount of factory overhead applied to Jobs 101 and 102 in January.
b. Prepare the journal entry to apply factory overhead to both jobs in January
using the predetermined overhead rate from (a).
c. Using the informaton provided along with the job cost informaton from
Check Up Corner 16-1, determine:
▪ The balance on the job cost sheets for Jobs 101 and 102 at the end of the month.
▪ The cost per unit for Jobs 101 and 102.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Check Up Corner
Applying Overhead and
Determining Job Cost Solution (slide 1 of 2)
a. 1
2
Direct
labor
hours
Factory
overhead
rate
Factory
overhead
applied
Job 101
700 ×
$4
=
$2,800
Job 102
600 ×
$4
=
$2,400
Total
b.
$5,200
Work in process
Factory overhead
A predetermined
overhead rate is used to
apply overhead costs to
individual jobs.
The factory overhead cost
applied to each job is
recorded on the job cost
sheet for each job.
5,200
5,200
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Check Up Corner
Applying Overhead and
Determining Job Cost Solution (slide 2 of 2)
The factory overhead costs
applied are from Slide 38.
Job 101
Job 102
Direct materials
$2,400
$4,200
Direct labor
$11,200
$7,200
Factory overhead
$2,800
$2,400
Total costs
$16,400
$13,800
Cost per unit
$32.80
$16,400 ÷ 500 units
The direct materials cost and
direct labor cost for each job
were determined in Check
Up Corner 16-1.
The total costs of each job
are accumulated on the job
cost sheet.
$13.80
$13,800 ÷ 1,000 units
The total cost is divided by
the number of units to
determine the cost per unit.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Disposal of Factory Overhead Balance
(slide 1 of 3)
• During the year, the balance in the factory
overhead account is carried forward and
reported as a deferred debit or credit on the
monthly (interim) balance sheets.
• However, any balance in the factory overhead
account should not be carried over to the next
year.
o This is because any such balance applies only to
operations of the current year.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Disposal of Factory Overhead Balance
(slide 2 of 3)
• The balance of Factory Overhead at the end of the year is disposed
of by transferring it to the cost of goods sold account as follows:
o If there is an ending debit balance (underapplied overhead) in the factory
overhead account, it is disposed of by the entry that follows:
Cost of goods sold
XXX
Factory overhead
XXX
Transfer of underapplied overhead of cost
of goods sold
o If there is an ending credit balance (overapplied overhead) in the factory
overhead account, it is disposed of by the entry that follows:
Factory overhead
Cost of goods sold
XXX
XXX
Transfer of overapplied overhead of cost of
goods sold
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Disposal of Factory Overhead Balance
(slide 3 of 3)
•
The journal entry to dispose of Legend Guitars’ December 31, 2018,
underapplied overhead balance of $150 is as follows:
Cost of goods sold
Factory overhead
150
150
Closed underapplied factory overhead to
cost of goods sold
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Work in Process
(slide 1 of 3)
Direct materials cost
Increased Work in Process
Direct labor cost
Applied factory overhead cost
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Job Cost Sheets and the Work
in Process Controlling Account
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Work in Process
(slide 2 of 3)
• During December, Job 71 was completed. The product
costs (direct materials, direct labor, and factory
overhead) are totaled upon completion. This total is
divided by the number of units produced to determine the
cost per unit.
o Thus, the 20 Jazz Series guitars produced as Job 71 cost
$512.50 ($10,250 ÷ 20) per guitar.
• After completion, Job 71 is transferred from Work in
Process to Finished Goods by the following entry:
Finished goods
Work in process
10,250
10,250
Job 71 completed in December
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Work in Process
(slide 3 of 3)
• Job 72 was started in December but was not
completed by December 31, 2018. Thus, Job 72
is still part of the work in process on December
31, 2018.
o Note that the balance of the job cost sheet for Job 72
($21,000) is also the December 31, 2018, balance of
Work in Process.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Finished Goods
• The finished goods account is a controlling
account for the subsidiary finished goods
ledger or stock ledger.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Finished Goods Ledger Account
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Sales and Cost of Goods Sold
• During December, Legend Guitars sold 40 Jazz
Series guitars for $850 each, generating total sales
of $34,000 ($850 × 40 guitars). The cost per guitar
sold was $500 or a total cost of $20,000 ($500 ×
40). The entries to record the sale and related cost
of goods sold are as follows:
Accounts receivable
34,000
Sales
34,000
Revenues received from guitars sold on
account
Costs of goods sold
Finished goods
20,000
20,000
Cost of 40 Jazz Series guitars sold
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Period Costs
(slide 1 of 2)
Used in generating
revenue during the
current period
Period costs
Not involved in the
manufacturing
process
Recorded as
expenses of the
current period
Selling
expenses
Administrative
expenses
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Period Costs
(slide 2 of 2)
• Selling expenses are incurred in marketing and
delivering the sold product to customers.
• Administrative expenses are incurred in
managing the company but are not related to the
manufacturing or selling functions.
• During December, Legend Guitars recorded the
following selling and administrative expenses:
Sales salaries expense
2,000
Office salaries expense
1,500
Salaries payable
3,500
Recorded December period costs
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Flow of Manufacturing Costs for Legend
Guitars
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Summary of Cost Flows for Legend Guitars
• Slide 52 shows the cost flows through the
manufacturing accounts of Legend Guitars for
December.
o The balances of Materials, Work in Process, and
Finished Goods are supported by their subsidiary
ledgers.
Controlling account
Balance and total of
related subsidiary ledger
($)
Materials
3,500
Work in process
21,000
Finished goods
10,250
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Income Statement of Legend Guitars
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Job Order Cost Systems for Service Businesses
(slide 1 of 2)
• A job order cost accounting system may be used
by a professional service business.
o For example, an advertising agency, an attorney, and
a physician each provide services to individual
customers, clients, or patients. In such cases, the
customer, client, or patient can be viewed as a job for
which costs are accumulated.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Job Order Cost Systems for Service Businesses
(slide 2 of 2)
• The primary product costs for a service business are direct labor and
overhead costs. Any materials or supplies are insignificant and are
included as part of overhead costs.
• Like a manufacturing business, direct labor and overhead costs of
rendering services to clients are accumulated in a work-in-process
account.
• When the job is completed and the client is billed, the costs are
transferred to a cost of services account.
o Cost of Services is similar to the cost of merchandise sold account for a
merchandising business or the cost of goods sold account for a
manufacturing business.
• A finished goods account and related finished goods ledger are not
necessary.
o This is because the revenues for the services are recorded only after the
services are provided.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Flow of Costs through a Service Business
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Check Up Corner
•
Job Order Costing for a Service Business
The Mad-Fly Agency provides consultng services to a variety of clients across the
country. The agency accumulates costs for each consultng project on the basis of
direct labor costs and allocated overhead costs. Mad-Fly’s estmated direct labor
and overhead costs for the year are as follows:
Direct labor hours (professional staff)
Hourly rate for professional staff
Estimated total overhead costs
•
20,000 hours
$180 per hour
$1,200,000
Mad-Fly allocates overhead costs to individual jobs based on the total estmated
direct labor hours of its professional services staf.
a. Determine Mad-Fly’s estmated predetermined overhead rate for the year.
b. Mad-Fly started and completed a consultng job for MT Industries during the
year (Job 402). The job required 200 direct labor hours of professional staf.
Determine the cost of the MT Industries job (Job 402).
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Check Up Corner
Applying Overhead and
Determining Job Cost
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Job Order Costing for Decision Making
(slide 1 of 2)
• A job order cost accounting system accumulates
and records product costs by jobs. The resulting
total and unit product costs can be compared to
similar jobs, compared over time, or compared to
expected costs.
o In this way, a job order cost system can be used by
managers for cost evaluation and control.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Comparing Data from Job Cost Sheets
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Job Order Costing for Decision Making
(slide 2 of 2)
• The job cost sheets can be analyzed for
possible reasons for the increased materials
cost for Job 63.
• Because the materials price did not change
($10 per board foot), the increased materials
cost must be related to the wood used.
• Thus, Legend Guitars should conduct an
investigation to determine the cause of the
extra 100 board feet used for Job 63.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
