05 Job-Order Costing

8/4/2019 05 Job-Order Costing

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AGUS SISWANDI

01153056

MANAGEMENT ACCOUNTING


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Chapter Five

Job-OrderCosting


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Learning Objectives

Describe the differences between job-

order costing and process costing, and

identify the types of firms that would useeach method.

Describe the cost flows and prepare the

journal entries associated with job-ordercosting.


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Learning Objectives (continued)

Identify and set up the source documents

used in job-order costing.


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Comparison of Job-Order and

Process Costing

Job-Order Costing Process Costing

1. Wide variety of distinct 1. Homogeneous products

products

2. Cost accumulated by job 2. Costs accumulated by

process or department

3. Unit cost computed by 3. Unit cost computed by

dividing total job costs dividing process costs of

by units produced on that the period by the unitsjob produced in the period


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Johnson Leathergoods - Example

Suppose that Stan Johnson forms a new company, Johnson

Leathergoods, which specializes in the production of custom

leather products. Stan believes that there is a market for

one-of-a-kind leather purses, briefcases, and backpacks. Inits first month of operation, he obtains two orders: the first

is for 20 leather backpacks for a local sporting goods store;

the second is for 10 distinctively tooled briefcases for the

coaches of a local college. Stan agrees to provide these

orders at a price of cost plus 50 percent.


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Johnson Leathergoods - Unit Cost

Direct materials $1,000

Direct labor 1,080

Overhead 240

Total cost $2,320

number of units 20

Unit cost $ 116======


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Job-Order Costing

Material Purchases

A. Raw materials account is debited for the cost of

materials purchased

Raw Materials Work in Process

(A)


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Exercise 5-10

A. Materials costing $3,000 were purchased on

account.

Raw Materials 3,000

Accounts Payable 3,000


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Job-Order Costing

Material Requisitions

B. Raw Materials is credited for the cost of materials

issued to jobs.

Work in Process is debited for the cost of materials

issued to jobs.Raw Materials Work in Process

(A) (B) (B)


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Exercise 5-10 (continued)

B. Materials totaling $1,700 were requisitioned

for use in production, $500 for Job 443 and the

remainder for Job 444.

Work in Process 1,700

Raw Materials 1,700


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Job-Order Costing

Direct Labor Incurred

C. Wages Payable is credited for the cost of direct labor.

Work in Process is debited for the cost of direct labor.

Wages Payable Work in Process

(C) (C)


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C. During the month, direct laborers worked 50

hours on Job 443 and 100 hours on Job 444.

Direct laborers are paid at the rate of $8 per

hour.


Wages Payable 1,200


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Job-Order Costing

Actual Overhead

D. Overhead Control is debited for actual overhead.

Overhead Control Work in Process

(D)


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D. Actual overhead for the month was $1,230 and

was paid in cash.

Overhead Control 1,230

Cash 1,230

J b O d C i


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Job-Order Costing

Applied Overhead

E. Overhead Control is credited for applied overhead.

Work in Process is debited for applied overhead.

Overhead Control Work in Process

(D)(E) (E)


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E. Overhead is applied using a plantwide rate of

$7.50 per direct labor hour.


Overhead Control 1,125

J b O d C i


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Job-Order Costing

Transfer of Completed Goods

F. Credit Work in Process for the COGM.

Debit Finished Goods for the COGM.

Work in Process Finished Goods

(B)

(C)

(E)

(F) (F)


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F. Job 443 was completed and transferred to

Finished Goods.

Finished Goods 1,275


J b O d C ti


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Job-Order Costing

Recognition of Expense

G. Credit Finished Goods for value of units sold.

Debit Cost of Goods Sold for value of units sold.

Finished Goods Cost of Goods Sold

(G) (G)


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G. Job 442, which had been completed and

transferred to Finished Goods in March, was

sold on account for cost ($2,000) plus 25

percent.

Cost of Goods Sold 2,000

Finished Goods 2,000

Accounts Receivable 2,500

Sales Revenue 2,500


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General Contractor Example

Direct Materials House #1 $ 90,000

House #2 100,000

House #3 30,000

Direct Labor House #1$65,000

House #2 70,000

House #3 15,000

Overhead is applied at 50 percent of DLC.

Houses #1 and #2 are completed during the period

House #1 is sold for $200,000 cash.


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General Contractor Example Solution

Work in Process Finished Goods

(1) 220,000 (4) 187,500

(2) 150,000 (4) 187,500 (5) 205,000 (6) 187,500

(3) 75,000 (5) 205,000

52,500 205,000

Cost of Goods Sold

(6) 187,500

187,500


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Job Cost Sheets for Example

(1) 90,000 (2) 65,000 (3) 32,500 (1) 100,000 (2) 70,000 (3) 35,000

187,500 205,000

House #1 House #2

House #3

(1) 30,000 (2) 15,000 (3) 7,500

52,500


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A Job Order Cost Sheet

Item Description: _________ Job Order Number: _______Quantity Competed: ______ Date Started: _____________

Date Completed:_________

Direct Materials Direct Labor Overhead

Req. No. Amount Ticket # Hours Rate Amt. Hours Rate Amt.

24-A $500 49 40 $10 $400 40 $1.60 $6446-B 650 71 30 8 240 30 3.00 90

Cost Summary

Direct Materials_______ Total Costs_________Direct Labor _______ Unit Cost _________Overhead _______

$1,150$640

$154

$1,944$19.44

Drill Bits100

16-C1/25/01

1/31/01


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A Materials Requisition Form

Requisition No._______Date:______ Department___________ Job No._____

Description Quantity Cost/Unit Total Cost

Delivered By___________ Received by______________

24-A1/25/01 Fabrication 16-C

Steel Stock 100 $5.00 $500

J. Jones D. Reller


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A Job Time Ticket

Employee No.______ Name____________ Date_________

Start Time Stop Time Total Time Rate Amt. Job No.

10:00 a.m. 4:00 p.m. 6.0 hours $10 $60 16-C

Ticket No._________49

101 F. Flintstone 1/24/01

Approved by __________________________Department Supervisor


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End of Chapter 5

05 Job-Order Costing

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