Job Order Cost Accounting

1
Job OrderCost Accounting
Chapter
19
2
Job Order Manufacturing
Chapter 20

• Used for production of large, unique,
  high-cost items.
• Built to order rather than mass produced.
• Many costs can be directly traced to each job.

3
Job Order Manufacturing
Chapter 20

• Typical job order cost applications
• Special-order printing
• Building construction
• Also used in service industry
• Hospitals
• Law firms

4
Events in Job Order Costing
Receive orders from customers.
Begin production.
Schedulejobs.
Ordermaterials.
5
Events in Job Order Costing
Direct
Materials
Indirect
Goods in Process
FactoryOverhead
Allocate
Indirect
Direct
Labor
6
Job Order Cost Documents

• The primary document for tracking the costs
  associated with a given job is the job cost sheet.

7
Job Cost Sheet
Exh. 19-2
8
Job Cost Sheet
Exh. 19-2
9
Materials Requisition
Exh. 19-5
10
Materials Requisition
Exh. 20-5
Properauthorization
Cost of material is charged toJob B15.
11
Materials Requisition
Exh. 20-5
12
Materials Requisition
Exh. 20-5
13
Materials Ledger Card
Exh. 19-4
14
Job Cost Sheet
Exh. 19-2
15
Job Cost Sheet
Exh. 19-2
16
Labor Time Ticket
Exh. 19-7
C. Luther
17
Job Cost Sheet
Exh. 19-2
18
Job Cost Sheet
Exh. 19-2
19
Job Cost Sheet
Exh. 19-2
20
Predetermined OverheadAllocation Rate Formula
Road Warriors uses a predetermined overhead
rate (POHR) based on direct labor cost to apply
overhead to jobs.
21
Cost Flows and Documents
Job Cost CostingDocument Flow Summary
22
Cost Flows and Documents
Exh. 19-3
Direct materials
The materials requisition indicates the cost of
direct materialsto charge tojobsand the cost
of indirect materials to charge to overhead.
Materials Ledger Cards
Materials Ledger Cards
Materials Ledger Cards
MaterialsRequisition
Indirect materials
23
Cost Flows and Documents
Job Cost CostingDocument Flow Summary
Exh. 19-6
Direct Labor
Employee time tickets indicate the cost of direct
laborto charge tojobsand the cost of indirect
labor to charge to overhead.
Job Cost Sheets
Job Cost Sheets
Job Cost Sheets
Job Cost Sheets
Employee Time Ticket
Employee Time Ticket
Employee Time Ticket
Employee Time Ticket
Factory Overhead Account
Indirect Labor
24
Summary of Cost Flows
25
Summary of Cost Flows
Exh. 19-11
Material Purchases
26
Summary of Cost Flows
27
Summary of Cost Flows
Flow of All Job Order Costs
Exh. 19-11
DirectMaterial
Incurred
28
Summary of Cost Flows
29
Summary of Cost Flows
Exh. 19-11
DirectMaterialDirectLaborOverhead
30
Overhead Application
31
Overhead Application
32
Question
If FishCo budgets overhead at 200,000
andestimates its activity to be 25,000 direct
labor hours for 2005, what is the POHR per direct
labor hour? a. 10.00 per hour b.
6.00 per hour c. 8.00 per hour d.
12.00 per hour
33
Question
If FishCo budgets overhead at 200,000
andestimates its activity to be 25,000 direct
labor hours for 2005, what is the POHR per direct
labor hour? a. 10.00 per hour b.
6.00 per hour c. 8.00 per hour d.
12.00 per hour
Estimated Overhead Estimated Activity
200,000 25,000 hours
POHR 8.00 per hour
34
Question
If FishCo actually worked 24,000 direct labor
hours for 2005, what amount of overhead would be
assigned to jobs in goods in process? a.
200,000 b. 192,000 c. 208,000 d.
196,000
35
Question
If FishCo actually worked 24,000 direct labor
hours for 2005, what amount of overhead would be
assigned to jobs in goods in process? a.
200,000 b. 192,000 c. 208,000 d.
196,000
36
Overhead Application
Reasons for using apredetermined overhead rate
37
Adjusting of Overapplied and Underapplied Overhead
38
Adjusting of Overapplied and Underapplied Overhead
39
Adjusting of Overapplied and Underapplied Overhead
40
Adjusting of Overapplied and Underapplied Overhead
Adjusting Cost of Goods Sold for underapplied or
overapplied overhead
41
Question
FishCo had actual manufacturing overhead costs of
180,000. FishCo applied 192,000 of
manufacturing overhead to jobs based on a POHR of
8.00 per direct labor hour. FishCos
manufacturing overhead is a. 12,000
overapplied. b. 12,000 underapplied. c.
96,000 overapplied. d. 96,000 underapplied.
42
Question
FishCo had actual manufacturing overhead costs of
180,000. FishCo applied 192,000 of
manufacturing overhead to jobs based on a POHR of
8.00 per direct labor hour. FishCos
manufacturing overhead is a. 12,000
overapplied. b. 12,000 underapplied. c.
96,000 overapplied. d. 96,000 underapplied.
43
Question
The difference between FishCo's actual and
applied overhead will result inan adjustment
that decreasescost of goods sold. a.
True b. False
44
Question
The difference between FishCo's actual and
applied overhead will result inan adjustment
that decreasescost of goods sold. a.
True b. False
If overhead is overapplied, cost of goods sold is
too high. The adjustment will decrease cost of
goods sold.
45
Job Order CostingTypical Accounting Entries
46
Job Order CostingTypical Accounting Entries
47
Job Order CostingTypical Accounting Entries
48
Job Order CostingTypical Accounting Entries
49
Job Order CostingTypical Accounting Entries
50
Job Order CostingTypical Accounting Entries
51
Job Order CostingTypical Accounting Entries
52
Job Order CostingTypical Accounting Entries
53
Job Order CostingTypical Accounting Entries
54
End of Chapter 19