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ACCO.506 JOB COSTING SYSTEM JOSE CINTRON,MBA

Job Costing, Job Costing System, Normal costing, ABC Costing

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Text of Job Costing, Job Costing System, Normal costing, ABC Costing

• 1. ACCO.506
JOB COSTING SYSTEM
JOSE CINTRON,MBA

2. JOB COSTING
Job order costing differs from Process costing in that the flow of costs is traced by job instead of by process. Accumulation of costs is make by specific jobs, contracts, or orders. This costing method is appropriate when direct costs can be identify with specific units of production.
3. Building-Block ConceptsofJob Costing Systems
Cost object
Direct costs
of a cost object
Indirect costs
of a cost object
4. Building-Block Conceptsof Job Costing Systems
Cost Assignment
Direct
Costs
Cost
Object
Cost Tracing
Indirect
Costs
Cost Allocation
5. Building-Block Conceptsof Costing Systems
Cost pool
Cost allocation base
6. Seven-Step Approachto Job Costing
Step 1:
Identify the chosen cost object.
Step 2:
Identify the direct costs of the job.
Step 3:
Select the cost-allocation bases.
Step 4:
Identify the indirect costs.
7. Seven-Step Approachto Job Costing
Step 5:
Compute the rate per unit.
Step 6:
Compute the indirect costs.
Step 7:
Compute the total cost of the job.
8. General Approach to Job Costing
A manufacturing company is planning to sell
a batch of 25 special machines (Job 506) to a
retailer for \$114,800.
Step 1:
The cost object is Job 506.
Step 2:
Direct costs are: Direct materials = \$50,000
Direct manufacturing labor = \$19,000
9. General Approach to Job Costing
Step 3:
The cost allocation base is machine-hours.
Job 506 used 500 machine-hours.
2,480 machine-hours were used by all jobs.
Step 4:
10. General Approach to Job Costing
Step 5:
Actual indirect cost rate is
\$65,100 2,480 = \$26.25 per machine-hour.
Step 6:
\$26.25 per machine-hour 500 hours = \$13,125
11. General Approach to Job Costing
Step 7:
Direct materials\$50,000
Direct labor19,000
Total\$82,125
12. General Approach to Job Costing
What is the gross margin of this job?
Revenues\$114,800
Cost of goods sold82,125
Gross margin\$32,675
What is thegross margin percentage?
\$32,675 \$114,800 = 28.5%
13. Source Documents
Job cost record
Materials requisition record
Labor time record
14. JOSE IS GOING TO TELL YOU HOW TO
Distinguish actual costing
from normal costing.
15. Costing Systems
Actual costing is a system that uses actual
costs to determine the cost of individual jobs.
It allocates indirect costs based on the actual
indirect-cost rate(s) times the actual quantity
of the cost-allocation base(s).
16. Costing Systems
Normal costing is a method that allocates
indirect costs based on thebudgeted
indirect-cost rate(s) times the actual
quantity of the cost allocation base(s).
17. Normal Costing
Assume that the manufacturing company budgets
\$60,000 for total manufacturing overhead costs
and 2,400 machine-hours.
What is the budgeted indirect-cost rate?
\$60,000 2,400 = \$25 per hour
How much indirect cost was allocated to Job 506?
500 machine-hours \$25 = \$12,500
18. Normal Costing
What is the cost of Job 506 under normal costing?
Direct materials\$50,000
Direct labor19,000
Total\$81,500
19. JOSE IS GOING TO TELL YOU HOW TO
Track the flow of costs
in a job-costing system.
20. Transactions
Purchase of materials and other manufacturing inputs
Conversion into work in process inventory
Conversion into finished goods inventory
Sale of finished goods
21. Transactions
Materials costing \$75,000 were sent to the
manufacturing plant floor.
\$50,000 were issued to Job No. 506 and
\$10,000 to Job 507.
\$15,000 of indirect materials were issued.
What is the journal entry?
22. Transactions
Work in Process Control:
Job No. 50650,000
Job No. 50710,000
Materials Control75,000
23. Transactions
Total manufacturing payroll for
the periodwas \$27,000.
Job No. 506 incurred direct labor costs
of \$19,000 and JobNo. 507 incurred
direct labor costs of \$3,000.
\$5,000 of indirect labor was also incurred.
What is the journal entry?
24. Transactions
Work in Process Control:
Job No. 50619,000
Job No. 5073,000
Wages Payable27,000
25. Transactions
Wages payable were paid.
Wages Payable Control 27,000
Cash Control27,000
Wages Payable
Control
Cash
Control
4. 27,000
4. 27,000
3. 27,000
26. Transactions
Assume that depreciation for the
period is \$26,000.
incurred amounted to \$19,100.
What is the journal entry?
27. Transactions
Accumulated Depreciation
Control26,000
Various Accounts19,100
28. Transactions
Jobs costing \$104,000 were completed and
transferred to finished goods, including Job 506.
29. Transactions
Job 506 was sold for \$114,800.
What is the journal entry?
Accounts Receivable Control114,800
Revenues 114,800
Cost of Goods Sold81,500
Finished Goods Control81,500
30. Transactions
What is the balance in the Finished Goods
Control account?
\$104,000 \$81,500 = \$22,500
salaries were \$9,000 and \$10,000.
What is the journal entry?
31. Transactions
Salaries Payable Control19,000
32. Transactions
Direct Materials Used\$60,000
+
Cost of Goods Manufactured\$104,000

Ending WIP Inventory\$40,000
=
33. Transactions
Cost of Goods Manufactured\$104,000
Ending Finished Goods Inventory \$22,500

Cost of Goods Sold\$81,500
=

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