Download Job Cost Sheet

Systems Design: Job-Order Costing
Chapter 3
McGraw-Hill/Irwin
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Types of Product Costing Systems
Process
Costing
Job-order
Costing

Many different products are produced each period.

Products are manufactured to order.

The unique nature of each order requires tracing or
allocating costs to each job, and maintaining cost
records for each job.
3-2
Comparing Process and Job-Order Costing
Job-Order
Number of jobs worked
Cost accumulated by
Average cost computed by
Process
Many
Individual
Job
Single Product
Job
Department
Department
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.
POHR =
Estimated total manufacturing
overhead cost for the coming period
Estimated total units in the
allocation base for the coming period
Ideally, the allocation base
is a cost driver that causes
overhead.
3-6
Determining Predetermined Overhead Rates
Predetermined overhead rates are calculated
using a three-step process.



Estimate the level of
production for the
period.
Estimate total amount
of the allocation base
for the period.
Estimate total
manufacturing
overhead costs.
POHR =  ÷ 
3-7
Job-Order Cost Accounting
3-8
Job-Order Costing
Document Flow Summary
Materials
used may be
either direct or
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
Manufacturing
Overhead
Account
POHR
rate used
to apply
overhead
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 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
3-18