COSTING SYSTEMS: JOB ORDER COSTING

DQ1.DQ2.DQ3.DQ4.and applied overhead costs.

COSTING SYSTEMS: JOB ORDER COSTING

Discussion Questions the cost of all jobs in process while process costing uses many Work in Process Inventory accounts, one for each process, department, or work cell. Job order first traces these costs to processes, departments, or work cells and then assigns costing is used by companies making special or unique products or services while costs to products. Job order costing measures cost for each completed unit while process costing measures cost in terms of units completed during a specific period.Job order costing uses a single Work in Process Inventory account to summarize The matching rule tracks or matches costs against the revenues they generate each process costing is used by companies making similar or identical products or in long production runs.CHAPTER 16—Solutions costs are matched against the revenues generated. Cost of Goods Sold increases and Finished Goods decreases.terials Inventory account and increase the Work in Process Inventory account. In addition, the costs of the requested materials decrease the appropriate accounts period. Costs flow into and out of the inventory accounts adhering to this rule.in the materials subsidiary ledger and increase the appropriate job order cost cards.

The accounting concept of cost measurement focuses on determining the amount of the cost. The accounting concept of cost recognition determines when a cost should be recorded. And, the matching concept compares revenues with the costs that were required to generate them.Job order costing recognizes production costs for specific jobs; process costing ess Inventory and increase Finished Goods Inventory. When goods are sold, their head costs as they are incurred, and reconciling the difference between the actual Direct Materials. When direct materials arrive, the cost of the items increases the Materials Inventory account. Following a materials request, the items requested are issued to the production departments. Direct materials costs then decrease the Ma- Direct Labor. When incurred, direct labor costs increase the Work in Process Inven- Overhead. An estimated amount of overhead increases the Work in Process Inven- Estimated and actual overhead costs are recognized and measured using the four steps. The four-step process involves planning an estimated rate at which overhead tory as work is done. The completed cost of goods produced decrease Work in Proc- costs will be assigned to products or services, assigning overhead costs at this pre- determined rate to products or services during production, measuring actual over- tory account and, at the same time, increase the appropriate job order cost cards.16-1 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Managerial Accounting 10th Edition Crosson Solutions Manual Visit TestBankDeal.com to get complete for all chapters

DQ5.Discussion Questions (Concluded) When managers plan, information about costs helps them develop budgets, estab- unit costs, and determine human resource needs. Daily, managers use cost infor- balances and the cost of goods or services sold for the financial statements. They also analyze internal reports that compare the organization’s measures of actual and tar- of activity, ensuring quality, and negotiating prices. When managers evaluate results, mation to make decisions about controlling costs, managing the company’s volume lish prices, set sales goals, plan production volumes, estimate product or service they analyze actual and targeted information to evaluate performance and make any necessary adjustments to their planning and decision-making strategies. When managers communicate with stakeholders, they use unit costs to determine inventory geted performance to determine whether cost goals for products or services are being achieved.16-2 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

• d.
• e.
• f.

a.b.c.d.(a) (a) 18,000 (b) 76,080 (b) (a) 52,000 1.

2.

3.

4.

5.

6.Dr. Work in Process Inventory, Cr. Payroll Payable Dr. Materials Inventory, Cr. Accounts Payable Dr. Work in Process Inventory, Cr. Overhead Dr. Work in Process Inventory, Cr. Materials Inventory SE3. Transactions in a Manufacturer's Job Order Costing System

76,080

Payroll Payable

34,000

Work in Process Inventory SE1. Job Order Versus Process Costing Systems job orderprocess job order process SE2. Transactions in a Manufacturer's Job Order Costing System process job order Overhead SE4. Accounts for Job Order Costing Short Exercises Dr. Work in Process Inventory, Cr. Materials Inventory Dr. Work in Process Inventory, Cr. Payroll Payable Dr. Materials Inventory, Cr. Accounts Payable Dr. Overhead, Cr. Accounts Payable Dr. Work in Process Inventory, Cr. Overhead Dr. Finished Goods Inventory, Cr. Work in Process Inventory 16-3 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

16 X

6/8/2014

Previous Current Months Month

$ 540 $ 820

340 620

880 550

$1,760 $1,990

JOB ORDER COST CARD

÷5

$ 750

Kowloon, Hong Kong Units completed Product unit cost Direct materials

• Kim

1,430

• Computer Systems

Overhead applied 960

Customer:

Specifications:

Totals Costs Charged to Job

$1,360

$3,750

Summary Direct labor Cost SE5. Job Order Cost Card

Date of Order:

Batch: Custom: Custom Computers Dr. Work in Process Inventory, Cr. Cash a.b.c.d.

Job Order:

Date of Completion:4/4/2014

Dr. Accounts Receivable, Cr. Revenues from Landscaping Services Dr. Work in Process Inventory, Cr. Accounts Payable Dr. Work in Process Inventory, Cr. Cash SE6. Job Order Costing in a Service Organization 16-4 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.