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Transcript of Systems Design: Job-Order Costing UAA – ACCT 202 Principles of Managerial Accounting Dr. Fred...
![Page 1: Systems Design: Job-Order Costing UAA – ACCT 202 Principles of Managerial Accounting Dr. Fred Barbee Chapter.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e1b5503460f94b09505/html5/thumbnails/1.jpg)
Systems Design: Job-Order Costing
UAA – ACCT 202 Principles of Managerial Accounting
Dr. Fred Barbee
Chapter
![Page 2: Systems Design: Job-Order Costing UAA – ACCT 202 Principles of Managerial Accounting Dr. Fred Barbee Chapter.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e1b5503460f94b09505/html5/thumbnails/2.jpg)
DirectMaterials
DirectMaterials
DirectLabor
DirectLabor
Mfg.Overhead
Mfg.Overhead
Work-in-Process
Work-in-Process
FinishedGoods
FinishedGoods
Cost-ofGoods Sold
Cost-ofGoods Sold
Cost Measurement
Cost Accumulation
Cost Assignment
Goal: Accurately costed products.
![Page 3: Systems Design: Job-Order Costing UAA – ACCT 202 Principles of Managerial Accounting Dr. Fred Barbee Chapter.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e1b5503460f94b09505/html5/thumbnails/3.jpg)
Job-Order Costing Vs. Process Costing - Similarities
The same basic purpose exists in both systems.
To assign direct material, direct labor and manufacturing overhead to products.
To provide a mechanism for computing unit cost.
Let’s
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Job-Order Costing Vs. Process Costing - Similarities
The same basic purpose exists in both systems.
Both systems maintain and use the same manufacturing accounts.
The flow of costs through the accounts is basically the same.
Let’s
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Cost Flows in a Manufacturing FirmCost Flows in a Manufacturing Firm
DMDM
DLDL
MOHMOH
DM Inv.DM Inv.
WIP Inv.WIP Inv.
FG Inv.FG Inv.
WIPWIP
Manufacturing Costs
COGSCOGS
S&AS&A
Sales
-= Gross Margin
-Net Income=
Balance Sheet
Income Statement
Unfinished
Finished
Sold
UnusedUsed
Used
Applied
![Page 6: Systems Design: Job-Order Costing UAA – ACCT 202 Principles of Managerial Accounting Dr. Fred Barbee Chapter.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e1b5503460f94b09505/html5/thumbnails/6.jpg)
Differences arise from two factors . . .
The flow of units in a process costing system is more or less continuous.
These units are indistinguishable from one another.Let’s
Job-Order Costing Vs. Process Costing - DifferencesDifferences
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Job-Order Costing
DM DL
MOH
Job 100
Job 101
Job 102
Finished Goods
Cost of Goods
Sold
Cost of Goods SoldWork in Process Finished Goods
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Process Costing System
DMDL
MOH
Process B
Process A
Finished Goods
Cost of Goods SoldProcess C
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Equivalent Units of Production
Total Cost
Cost Per UnitCost of Units
in WIP
Information Provided by Cost System
Information provided by a cost system.
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Valuing Inventory
Planning & Control
Pricing Products
Financial Reporting
Decision Making
Usefulness of Cost Information
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Unit CostIs based on an averaging process . . .
. . . With the averaging process being dependant on the system used.
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Flow of Documents in a Job-Order Costing System
Sales Order
Production Order
A sales order is prepared as a basis for issuing a . . .
A production order initiates work on a job, whereby costs are charged through:
Materials Requisition
Form
Direct Labor Time Ticket
Predetermined Overhead Rates
Job Cost Sheet
![Page 13: Systems Design: Job-Order Costing UAA – ACCT 202 Principles of Managerial Accounting Dr. Fred Barbee Chapter.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e1b5503460f94b09505/html5/thumbnails/13.jpg)
DirectMaterials
DirectMaterials
DirectLabor
DirectLabor
Mfg.Overhead
Mfg.Overhead
Work-in-Process
Work-in-Process
FinishedGoods
FinishedGoods
Cost-ofGoods Sold
Cost-ofGoods Sold
![Page 14: Systems Design: Job-Order Costing UAA – ACCT 202 Principles of Managerial Accounting Dr. Fred Barbee Chapter.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e1b5503460f94b09505/html5/thumbnails/14.jpg)
DirectMaterials
DirectMaterials
DirectLabor
DirectLabor
Mfg.Overhead
Mfg.Overhead
Work-in-Process
Work-in-Process
FinishedGoods
FinishedGoods
Cost-ofGoods Sold
Cost-ofGoods Sold
![Page 15: Systems Design: Job-Order Costing UAA – ACCT 202 Principles of Managerial Accounting Dr. Fred Barbee Chapter.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e1b5503460f94b09505/html5/thumbnails/15.jpg)
DirectMaterials
DirectMaterials
DirectLabor
DirectLabor
Mfg.Overhead
Mfg.Overhead
Work-in-Process
Work-in-Process
FinishedGoods
FinishedGoods
Cost-ofGoods Sold
Cost-ofGoods Sold
![Page 16: Systems Design: Job-Order Costing UAA – ACCT 202 Principles of Managerial Accounting Dr. Fred Barbee Chapter.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e1b5503460f94b09505/html5/thumbnails/16.jpg)
Cost Assignment Dilemma
DirectMaterials
Direct Labor
Assigned Overhead
TraceableUnit Costfor FinishedGoods
Problem
Mfg. Process
(Work in
Process)
Costs must be assigned using some activity base and a predetermined overhead rate.
![Page 17: Systems Design: Job-Order Costing UAA – ACCT 202 Principles of Managerial Accounting Dr. Fred Barbee Chapter.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e1b5503460f94b09505/html5/thumbnails/17.jpg)
Cost Assignment Dilemma
DirectMaterials
Direct Labor
Assigned Overhead
TraceableUnit Costfor FinishedGoods
Problem
Mfg. Process
(Work in
Process)
Estimated Overhead POR = ------------------------------------------- Estimated Units in Activity Base
Solution?
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Timeliness
Why Allocate?
Simplify Record- keeping
Avoid Seasonal Factors
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Criterion: Cause-and-Effect
Relationship
Units produced
Direct Labor Hours
Direct Labor $
Machine Hours
Direct Materials
Choice of activity base used in the calculation of the Predetermined Overhead Rate.
Possible Drivers
POR
Selecting an Allocation Base
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Basic Concept of Applied Overhead
Applied overhead = Overhead rate x Actual production activity
Two points to consider in the application of MOH
Applied overhead is the basis for computing per-unit overhead cost.
Applied overhead is rarely equal to a period's actual overhead costs.
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Summary of Overhead Concepts
Estimated Overhead Cost
The amount of estimated overhead
costs.
Actual Overhead Cost
The amount of overhead costs
actually incurred.
Applied Overhead Cost
The amount of overhead costs applied to WIP.
Difference equals Under- or Over- applied Overhead.
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The Manufacturing Overhead Account
Actual Overhead Costs
Overhead Applied to WIP
MOH
xxx xxx
A “Clearing” Account
Amounts rarely agree