Managerial accounting by garrison noreen13th chap003

Systems Design: Job-Order Costing Chapter McGraw­Hill/Irwin    Copyright © 2010 by The McGraw­Hill Companies, Inc. All rights reserved Types of Product Costing Systems Process Costing     Job-order Costing Many Many different different products products are are produced produced each each period period Products Products are are manufactured manufactured to to order order The The unique unique nature nature of of each each order order requires requires tracing tracing or or allocating allocating costs costs to to each each job, job, and and maintaining maintaining cost cost records records for for each each job job   3-2 Comparing Process and Job-Order Costing 3-3 Measuring Direct Materials Cost 3-4 Job-Order Cost Accounting 3-5 Manufacturing Overhead Application The predetermined overhead rate (POHR) used to apply overhead to jobs is determined before the period begins 3-6 Determining Predetermined Overhead Rates Predetermined overhead rates are calculated using a three-step process   Estimate Estimate the the level level of of production production for for the the period period   Estimate Estimate total total amount amount of of the the allocation allocation base base for for the the period period   Estimate Estimate total total manufacturing manufacturing overhead overhead costs costs POHR =  ÷  3-7 Job-Order Cost Accounting 3-8 Job-Order Costing Document Flow Summary Materials Materials used used may may be be either either direct direct or or indirect indirect Direct materials Job Cost Sheets Materials Requisition Indirect materials Manufacturing Overhead Account 3-9 Job-Order Costing Document Flow Summary An employee’s time may be either direct or indirect Direct Labor Job Cost Sheets Employee Time Ticket Indirect Labor Manufacturing Overhead Account 3-10 Job-Order Costing Document Flow Summary Materials Requisition Other Actual OH Charges Employee Time Ticket Indirect Material POHR rate used to apply Manufacturing overhead Overhead Account Job Cost Sheets Indirect Labor 3-11 The Purchase and Issue of Raw Materials Raw Materials Material Direct Purchases Materials Indirect Materials  Work in Process (Job Cost Sheet) Direct Materials  Mfg Overhead Actual Applied Indirect Materials 3-12 Cost Flows – Material Purchases Raw material purchases are recorded in an inventory account 3-13 Cost Flows – Material Usage Direct materials issued to a job increase Work in Process and decrease Raw Materials Indirect materials used are charged to Manufacturing Overhead and also decrease Raw Materials 3-14 The Recording of Labor Costs Salaries and Wages Payable Direct Labor Indirect Labor  Work in Process (Job Cost Sheet) Direct Materials Direct Labor  Mfg Overhead Actual Indirect Materials Indirect Labor Applied 3-15 Applying Manufacturing Overhead Salaries and Wages Payable Direct Labor Indirect Labor  Mfg Overhead Actual Applied Indirect Materials Overhead Indirect Applied to Labor Work in Other Process Overhead Work in Process (Job Cost Sheet) Direct Materials Direct Labor Overhead Applied  If actual and applied manufacturing overhead are not equal, a year-end adjustment is is required required 3-16 Transferring Completed Units Work in Process (Job Cost Sheet ) Direct Materials Direct Labor Overhead Applied  Finished Goods Cost of Goods Mfd  Cost of Goods Mfd  3-17 End of Chapter 3-18 ... Comparing Process and Job-Order Costing 3-3 Measuring Direct Materials Cost 3-4 Job-Order Cost Accounting 3-5 Manufacturing Overhead Application The predetermined overhead rate (POHR) used to... total manufacturing manufacturing overhead overhead costs costs POHR =  ÷  3-7 Job-Order Cost Accounting 3-8 Job-Order Costing Document Flow Summary Materials Materials used used may may be