Prepared by Diane Tanner University of North Florida Chapter 4 Job Costing Concepts.
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Transcript of Prepared by Diane Tanner University of North Florida Chapter 4 Job Costing Concepts.
Prepared byDiane TannerUniversity of North Florida
Chapter 4
Job Costing Concepts
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Methods of Tracking Product CostsProcessCosting
JobCosting
Homogeneous products manufactured
Costs are traced or allocated to each process
Examples: Dog food, cereal, canned vegetables, bottles of beer
Manufactured to order Costs are traced or allocated
to jobs Separate cost records for
each distinct ‘job’ or batch Examples: Patients, printing,
buildings, patients, clients
OperationCosting
For products with differing materials and similar processes
Material costs are traced while conversion costs are allocated
Flow of costs is the same under all methods:
RM → WIP → FG → CGS
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Overview of Job Costing
Also called job order costing Appropriate for production of
Tangible items—ships, bridges, cabinets, etc. Services—tax returns, lawn care, divorce
cases, etc. Involves costs accumulated by ‘job’ usually
for a particular order or batch• Normal costing used to apply MOH
– Applied using a predetermined OH rate based on actual activity
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Job Costing Accounting General ledger
One WIP ‘control’ account Subsidiary ledger
Used with job costing systems to track the individual job costs
Consists of multiple job cost sheets One account/job cost sheet for each job Used to track/capture costs of a job
Reconcile at end of period
Totals of all costs posted to each 'job' in the subsidiary ledger
Total amounts posted to the control account in the
general ledger=
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Job Cost Sheet
Job Number A - 143 Date Initiated March 3Date Completed
Department B3 Units CompletedItem Wooden cargo crate
Direct Materials Direct Labor Manufacturing OverheadReq. No. Amount Ticket Hours Amount Hours Rate Amount
Cost Summary Direct Materials Direct Labor Manufacturing overhead Total Cost Unit Cost
Tracking Job Costs
Manufacturing OverheadApplied using a predetermined rate
Direct MaterialsTraced from
materials requisition forms
Direct LaborTraced from time tickets
Job cost sheetPrimary document for tracking individual job costs
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Subsidiary Ledger Individual costs are posted to each job in the WIP
subsidiary ledger. The total of direct material, direct labor, and overhead
applied is posted to the WIP control account.
WIP Control WIP - Job 27 WIP - Job 28 WIP - Job 30 WIP - Job 31
1,360 800 560
2,110 570 440 780 320
2,265 450 840 600 375
1,812 360 672 480 300
5,687 2,180 2,512 995
1,860 0 0 1,860 0
The balance of the WIP control account must equal the balance of the jobs in the WIP subsidiary ledger.
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Job Cost Example
Direct labor cost 14,800 hours @ $14.60 per hourFactory overhead $248,492Machine hours 8,875 machine hours
Direct materials requisitioned $400Direct labor hours 70 hours @ $15.20 per hourMachine-hours 42 machine hours
Sanja Enterprises uses job costing and applies overhead based on machine hours. Sanja’s budgeted annual information follows:
Actual data for Job #178
Actual direct labor cost for all jobs for the entire year totaled $220,200. Actual annual manufacturing overhead cost was $247,000. Actual machine hours for all jobs for the entire year totaled 96,050. Show the calculation of the total cost of Job 178.
POHR = $248,492 8,875
= $28.00 per machine hourDM $ 400DL (70 x $15.20) 1,064MOH ($28 x 42) 1,176Total job cost $2,640
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The End