Escolar Documentos
Profissional Documentos
Cultura Documentos
McGraw-Hill/Irwin
Learning Objective 1
McGraw-Hill/Irwin
Financial Accounting
Product costs are used to value inventory and to compute cost of goods sold.
Learning Objective 2
McGraw-Hill/Irwin
Work-in-Process Inventory Direct material cost Direct labor cost Manufacturing overhead Product cost transferred when product is finished
Cost of Goods Sold Expense closed into Income Summary at end of accounting period
Income Summary
Learning Objective 3
McGraw-Hill/Irwin
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.
Job-shop operations Products manufactured in very low volumes or one at a time. Batch-production operations Multiple products in batches of relatively small quantity.
Typical job-order cost applications: Special-order printing Building construction Also used in service industry Hospitals Law firms
Used for production of small, identical, low cost items. Mass produced in automated continuous production process. Costs cannot be directly traced to each unit of product.
Typical process cost applications: Petrochemical refinery Paint manufacturer Paper mill
Lets investigate
Date
Requisition Number
Unit Price
Cost
Date
Unit Price
Cost
Cost Summary Cost Item Total direct material Total direct labor Total manufacturing overhead Total cost Unit cost
Amount
Date
Cost Balance
Date
Requisition Number
Unit Price
Cost
A materials requisition Date Unit Price form isCost used to Cost Summary authorize the use of Cost Item Amount Total direct material materials on a job. Total direct labor
Manufacturing Overhead Requisition Number Quantity Total manufacturing overhead Total cost Unit cost Shipping Summary Units Remaining Units Shipped in Inventory
Date
Amount $112 22
Authorized Signature
Timothy Williams
Date
Unit Price
Cost
Date
Unit Price
Cost
Cost Summary Cost Item Total direct material Total direct labor Total manufacturing overhead Total cost Unit cost
Amount $18,000
Date
Cost Balance
Date
Requisition Number
Unit Price
Cost
Date
Unit Price
Cost
Cost Summary Cost Item Total direct material Total direct labor Total manufacturing overhead Total cost Unit cost
Amount $18,000
Accumulate direct labor costs by means of a work record, such as a time ticket, for each employee.
Lets see one
Date
Cost Balance
Cost $12,000
Date
Unit Price
Cost
Cost Summary Cost Item Total direct material Total direct labor Total manufacturing overhead Total cost Unit cost
Date
Cost Balance
Cost $12,000
Date
Unit Price
Cost
Cost Summary Cost Item Total direct material Total direct labor Total manufacturing overhead Total cost Unit cost
Apply manufacturing overhead to jobs using a predetermined overhead rate based on direct labor hours (DLH). Shipping Summary Lets do it Units Remaining
Date Units Shipped in Inventory Cost Balance
Cost $12,000
Date 11/30
Manufacturing Overhead Requisition Number Quantity Machine hours 2,000 Cost Summary Cost Item
Cost $18,000
Total direct material Total direct labor Total manufacturing overhead Total cost Unit cost
Date
Cost Balance
Cost $12,000
Date 11/30
Manufacturing Overhead Requisition Number Quantity Machine hours 2,000 Cost Summary Cost Item
Cost $18,000
Total direct material Total direct labor Total manufacturing overhead Total cost Unit cost
Date 11/30
Cost $12,000
Date 11/30
Manufacturing Overhead Requisition Number Quantity Machine hours 2,000 Cost Summary Cost Item
Cost $18,000
Total direct material Total direct labor Total manufacturing overhead Total cost Unit cost
Date 11/30
Learning Objective 4
McGraw-Hill/Irwin
Learning Objective 5
McGraw-Hill/Irwin
Lets summarize the document flow we have been discussing in a job-order costing system.
Lets examine the cost flows in a job-order costing system. We will use T-accounts and start with materials.
Mfg. Overhead
Indirect Material
Next lets add labor costs and applied manufacturing overhead to the job-order cost flows. Are you with me?
Mfg. Overhead
Indirect Material Indirect Labor
Mfg. Overhead
Indirect Overhead Material Applied to Work in Indirect Process Labor
Now lets complete the goods and sell them. Still with me?
Finished Goods
Cost of Goods Mfd. Cost of Goods Sold
Lets return to RoseCo and see what we will do if actual and applied overhead are not equal.
OR
Work in Process Finished Goods Cost of Goods Sold
RoseCos Method
$650,000
$30,000
$680,000
$30,000 overapplied
Learning Objective 6
McGraw-Hill/Irwin
$xxx xxx xxx $xxx xxx xxx $xxx xxx $xxx xxx $xxx
Schedule of Cost of Goods Sold Finished goods inventory, beginning Add: Cost of goods manufactured* Cost of goods available for sale Deduct: Finished goods inventory, ending Cost of goods sold Add: Underapplied overhead or Deduct: Overapplied overhead Cost of goods sold (adjusted) * From Cost of Goods Manufactured Schedule $xxx xxx $xxx xxx $xxx xxx $xxx
Using a predetermined rate makes it possible to estimate total job costs sooner.
Actual overhead for the period is not known until the end of the period.
Finishing Department
Painting Department
Shipping Department
A two-stage process is necessary because different departments may have different cost drivers.
Learning Objective 7
McGraw-Hill/Irwin
Indirect Labor
Indirect Materials
Other Overhead
Cost pools
Department 1
Department 2
Department 3
Indirect Labor
Indirect Materials
Other Overhead
Cost pools
Stage Two: Costs applied to products
Department 1
Direct Labor Hours
Department 2
Machine Hours
Department 3
Raw Materials Cost
Products
Departmental Allocation Bases
Learning Objective 8
McGraw-Hill/Irwin
Cases Programs
Missions Contracts
Learning Objective 9
McGraw-Hill/Irwin
I agree!
Overhead Allocation
End of Chapter 3