AKUNTANSI MANAJEMEN OPENCOURSEWARE UNIVERSITAS PEMBANGUNAN JAYA ch5 Slide ACC204 ch5

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Job-Order

Costing

CHAPTER

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1. Describe the differences between job-order

costing and process costing, and identify the types of firms that would use each method.

2. Identify and set up the source documents used in job-order costing.

3. Describe the cost flows associated with job-order costing.

4. Appendix: Prepare the journal entries associated with job-order costing.

Objectives

After studying this

chapter, you should

be able to:

After studying this

chapter, you should

be able to:

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Comparison of Job-Order and

Process Costing

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Characteristics of Job-Order Costing



Wide-variety of services

or products that are quite

distinct from each other



Cost accumulated by job



Unit cost computed by

dividing total job costs

by units produced on that

job

BEAT

SOUTH

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Characteristics of Process Costing



Produce large quantities of

similar or homogeneous

products



Cost accumulated by process or

department for a given period

of time



Unit cost computed by dividing

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Process or

job-order

costing?

Process or

job-order

costing?

Process Process Job order Job order Job order Process Job order

Exxon oil refinery

Coca Cola plant

Custom home builder

Shop for customizing vans

Television repair shop Campbell soup plant Advertising agency

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Job 425 Job 426 Job 427 Total

Beginning balance $58,600 $51,300 $ 0 $109,900

Current costs:

Direct materials 4,800 3,600 23,500 31,900

Direct labor 6,000 9,000 10,000 25,000

Applied overhead 2,400 3,600 4,000 10,000

Total $71,800 $67,500 $37,500 $176,800

This information is used to determine the total

cost of goods manufactured.

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Johnson Leathergoods

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Job-Order Cost Sheet

A job-cost sheet is a

document used to

accumulate the cost for

a specific job in a

job-cost system

A

job-cost sheet

is a

document used to

accumulate the cost for

a specific job in a

job-cost system

Job Cost Sheet

Direct Materials Direct Labor

Factory Overhead

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Direct materials $1,000

Direct labor 1,080

Applied Overhead 240

Total cost $2,320

 number of units  20

Unit cost $ 116

Johnson Leathergoods

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Date

Department Job

Authorized Signature

Description Quantity Cost/Unit Total Cost

Jim Lawson

Buckles 10 $30 $300

Material Requisition Form Material Requisition Form

Material Requisition Number 12 January 11, 2004

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Johnson Leathergoods

Authorized Signature

Start Time Stop Time Total Time Hourly Rate Amount Job Number

Jim Lawson

Job Time Ticket Job Time Ticket

Job Time Ticket Number 8 Employee Number

Name Date

8:00 10:00 2 $9 $18 Backpacks 10:00 11:00 1 9 9 Briefcases 11:00 12:00 1 9 9 Backpacks

1:00 5:00 4 9 36 Backpacks 4

Ed Wilson

January 12, 2003

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Through the Accounts

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Materials Account

Beginning balance $0

Purchases 2,500

Direct material used 1,500 Ending balance 1,000

Job Order Cost Sheet Job Order Cost Sheet Job: 20 Backpacks Job: 10 Briefcases

Direct materials 1,000 Direct materials $500 Direct labor Direct labor

Overhead applied Overhead applied

Total cost Total cost

Number of units 20 Number of units 10

Unit cost Unit cost

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Summary of Direct Labor Cost Flows

Wages Payable

Direct hours 170 x wage rate x $9 Total direct labor $ 1,530

Direct materials $ 1,000 Direct materials $ 500 Direct labor 1,080 Direct labor 450 Overhead applied Overhead applied

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Actual overhead costs are never assigned directly to jobs.

Overhead is applied using a predetermined overhead rate. Actual overhead costs are never

assigned directly to jobs. Overhead is applied using a predetermined overhead rate.

Estimated Overhead Overhead rate =

Estimated Direct Labor Hours

$9,600 4,800

= $2 per direct labor hour

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Estimated Overhead ($) for Each Driver

Expected Demand for Each Driver

Purchasing $3,000 Purchase orders 100

Machining 4,200 Machine hours 2,800

Other 2,400 Direct labor hours 4,800

$3,000 ÷ 100 = $30 per purchase order $4,200 ÷ 2,800 = $1.50 per machine hour

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Backpacks:

Briefcases:

Purchase orders 3

Machine hours 60

Direct labor hours 120

Purchase orders 1

Machine hours 30

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Purchasing:

3 orders x $30 $ 90

1 order x $30 $30

Machining:

60 hours x $1.50 90

30 hours x $1.50 45

Other:

120 DLH x $0.50 60

50 DLH x $0.50 25

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Summary of Overhead Cost Flows

Actual Overhead

Lease $200

Utilities 50 Equipment depreciation 100 Indirect labor 65 Total actual overhead $415

Job Order Cost Sheet Job: 20 Backpacks

Job Order Cost Sheet Job: 10 Briefcases

Direct materials $1,000 Direct materials $500 Direct labor 1,080 Direct labor 450 Overhead applied 240 Overhead applied 100 Total cost Total cost

Number of units Number of units Unit cost Unit cost

Applied Overhead

Direct labor hours 170 Overhead rate x $2 Total applied overhead $340

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Summary of Overhead Cost Flows

Actual Overhead Applied Overhead

Lease $200 Direct labor hours $170

Utilities 50 Overhead rate x $2

Equipment depreciation 100 Total applied overhead $340 Indirect labor 65

Total actual overhead $415

Direct materials $1,000 Direct materials $500

Direct labor 1,080 Direct labor 450

Overhead applied 240 Overhead applied 100

Number of units 20 Number of units 10

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Summary of Finished Goods Cost Flows

Direct materials $1,000 Direct materials $500 Direct labor 1080 Direct labor 450 Overhead applied 240 Overhead applied 100 Total cost $2,320 Total cost $1,050 Number of units 20 Number of units

Unit cost $116 Unit cost Finished Goods Account

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Schedule of Cost of Goods Manufactured

For the Month Ended January 31, 2004

Direct materials:

Beginning raw materials inventory $ 0 Purchases of raw materials 2,500 Total raw materials available for use $2,500 Ending raw materials 1,000

Total raw materials used $1,500

Direct labor 1,530

Overhead:

Lease $ 200

Utilities 50

Depreciation 100

Indirect labor 65 $ 415

Continued

Continued Continued

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$ 415 Less: Underapplied overhead 75

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Statement of Cost of Goods Sold

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Johnson Leathergoods Income Statement

For the Month Ended January 31, 2004

Sales $3,480

Cost of goods sold 2,395

Gross margin $1,085

Less selling and administrative expenses:

Selling expenses $200

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Journal Entries

Associated With

Job-Order Costing

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1. Materials costing $2,500 were

purchased on account.

The receiving report and the invoice are used to record the receipt of the

merchandise and to control the payment.

1 Materials 2 500 00

Accounts Payable 2 500 00

Johnson Leathergoods

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2. Materials costing $1,500 were

requisitioned for use in production.

2 Work in Process 1 500 00

Materials 1 500 00

Johnson Leathergoods

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3. Direct labor costing $1,530 was

recognized.

3 Work in Process 1 530 00

Wages Payable 1 530 00

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4. Overhead was applied to production at the

rate of $2 per direct labor hour. A total of

170 direct labor hours were worked.

4 Work in Process 340 00

Overhead Control 340 00

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5. Actual overhead costs of $415 were

incurred: lease, $200; utilities, $50;

depreciation, $100; accrued wages, $65.

5 Overhead Control 415 00

Lease Payable 200 00 Utilities Payable 50 00 Accumulated Depreciation 100 00 Wages Payable 65 00

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6. The backpacks were completed and transferred

to finished goods.

6 Finished Goods 2 320 00

Work in Process 2 320 00

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7. The backpacks were sold at

cost plus 50 percent.

7 Cost of Goods Sold 2 320 00

Finished Goods 2 320 00

Johnson Leathergoods

7 Accounts Receivable 3 480 00

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8. Underapplied overhead was closed to cost of

goods sold.

8 Cost of Goods Sold 75 00

Overhead Control 75 00

Johnson Leathergoods

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Materials

(1) 2,500

Johnson Leathergoods

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(2) Issue of materials

Work in Process

(2) 1,500 (2) 1,500

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Johnson Leathergoods

(3) Incurrence of direct labor cost

Work in Process

(2) 1,500

(3) 1,530

Wages Payable

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Johnson Leathergoods

(4) Estimated overhead applied to Work in

Process

Work in Process

(2) 1,500

(3) 1,530

(4) 340

Overhead Control

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(5) Actual overhead recorded

Work in Process

(2) 1,500

(3) 1,530

(4) 340

Overhead Control

(4) 340

(5) 415

Johnson Leathergoods

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(6) Transfer of Job 1 to finished goods

Work in Process Finished Goods

(6) 2,320 (6) 2,320

(2) 1,500

(3) 1,530

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Johnson Leathergoods

(7) Cost of goods sold for Job 1 and

revenue from sale on account

Finished Goods

(6) 2,320

Cost of Goods Sold

Accounts Receivable

(7) 3,480

Sales Revenue

(7) 3,480

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Johnson Leathergoods

(8) Underapplied overhead closed

Overhead Control

(4) 340

(5) 415

(8) 75

Cost of Goods Sold

(7) 2,320

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The End

Chapter Five

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