Lesson 1: Job Order Costing
Costs: necessary to
Asses profits
Determine prices
Provide incentives
Job-order costing
many different products or services produced each period
each product (or job) is different from all others and requires
separate costing
costs are traced or allocated to jobs
Material Reacquisition Form: authorizes the use of materials in a job
Time Ticket: used by workers to determine time spent in each hob
By definition, overhead consists of costs that cannot practically be traced
to products or jobs. Therefore, overhead costs must be allocated rather
than traced if they are to be assigned to products or jobs. Many
production costs cannot be traced to a particular product or job, but
rather are incurred as a result of overall production activities. Therefore,
in order to be assigned to products, such costs must be allocated to the
products in some manner.
The Job Cost sheet is used to record all costs that are assigned to a
particular job.
Include direct materials cost traced to the job
Direct labour cost traced to the job
manufacturing overhead cost applied to the job
When a job is completed, the job cost sheet is used to compute the cost
per completed unit.
The job cost sheet is also a control document for: (1) determining how
many units have been sold and determining the cost of these units; (2)
determining how many units are still in inventory at the end of a period
and determining the cost of these units on the balance sheet.
Predetermined overhead rate :is the rate used to apply overhead costs to
jobs.
It is determined before a period
Costs: necessary to
Asses profits
Determine prices
Provide incentives
Job-order costing
many different products or services produced each period
each product (or job) is different from all others and requires
separate costing
costs are traced or allocated to jobs
Material Reacquisition Form: authorizes the use of materials in a job
Time Ticket: used by workers to determine time spent in each hob
By definition, overhead consists of costs that cannot practically be traced
to products or jobs. Therefore, overhead costs must be allocated rather
than traced if they are to be assigned to products or jobs. Many
production costs cannot be traced to a particular product or job, but
rather are incurred as a result of overall production activities. Therefore,
in order to be assigned to products, such costs must be allocated to the
products in some manner.
The Job Cost sheet is used to record all costs that are assigned to a
particular job.
Include direct materials cost traced to the job
Direct labour cost traced to the job
manufacturing overhead cost applied to the job
When a job is completed, the job cost sheet is used to compute the cost
per completed unit.
The job cost sheet is also a control document for: (1) determining how
many units have been sold and determining the cost of these units; (2)
determining how many units are still in inventory at the end of a period
and determining the cost of these units on the balance sheet.
Predetermined overhead rate :is the rate used to apply overhead costs to
jobs.
It is determined before a period
