at this date, April 7th 2020,

Muhammad Kemal A (1710532033) and Muhammad Mukhskin (1710532033)

present:
 Accounting Department
Faculty of Economy

Hybrid
Costing System
Seminar on Management Accounting
Learning Objectives
1. Understand Hybrid Costing
2. Understand the treatment of cost accounting if
company adopts Hybrid Production Process
1. Hybrid Costing System
Hybrid costing system (also called batch
manufacturing process or operation costing.
It blends characteristics from both job-costing and
process-costing systems.
 Job Order Costing Method
used by company that produced
customizable products or heterogen.
“Order” refers to jobs that company
Process order to do production process not
order by customer. Product’s price
Costing accumulated when product is finished,
because every product requires
different resources or process.
Production cost for
raw material
and labor
Process Costing Method calculated based
used by company that produced
standardized products or homogenic.
Job Order on actual
costing while
Product produced frequently by
company to fulfill market.
Costing FOH cost
accumulated
Product’s price accumulated at the end at the beginning
of accounting period. Production cost (raw or based on normal costing.
material, labor, FOH) charged to product
based on actual costing.
 Process Costing Job Order Costing
Method Method

Product produced Homogen product Heterogen product

Production cost
charged method Actual costing Normal Costing

Product’s price
After production At the end of
calculated period
finished accounting period

Object to calculate
For every process For every job ordered
price
Cost of production
Way to collect cost Job order cost sheet
report
cement companies, public accountant
mineral water offices, furniture
Example companies companies, companies, hotel (to
that apply method convection, hospital calculate customer
and hotel (to charge charge).
room).
Hybrid Costing System
This method used by company that produce product with different raw material (same
with Job Order Costing), but through the same production process (same with Process
Costing). Production cost for raw material cost is charge to product like Job Order Costing,
whilst labor and overhead cost (conversion cost) are charge to product like Process
Costing. Production cost collected using Work Order Sheet. Conversion cost rate budget for
one period can be calculated with formula:

Budget Budgeted conversion costs for 1 year for spesific operation

conversion =
kbkcost Normal capacityof cost driver

Picture shows two Rolls

Royce Phantom
dashboards, one with
Leather finish and other
with wood finish. Both
are the same car, with
the same body design,
but with customizable
dashboard finish.
2. Accounting for Hybrid Costing System
We will use example from ABC Company that produce clothing
to understand accounting for Hybrid Costing System
ABC company, The Clothing Company that produce two type of blazer
there are wool and polyester blazer. .in May they accept 50 order for
wool blazer and 100 for polyester blazer. The following is the description
about direct material and the production process of each blaze. Work
order 505 for wool blazer and work order 506 for polyester blazer
1. Identify the Conversion-rate each operation process
2. Allocating the direct material and the cost to each process
that need by each product with using work order Sheet
(work order 505)
2. Allocating the direct material and the cost to each process
that need by each product with using work order sheet
(work order 506)
3. Journal entries

1. To record using direct material wool as Rp. 5.000.000 and polyester Rp. 3.000.000
WIP Inventory-Cutting cloth Department Rp.8.000.000
Raw Material Inventory Rp.8.000.000

2. To record conversion cost at Cutting cloth Department. Rp. 1.000.000 for WO 505 and Rp. 3.000.000 for WO 506

WIP inventory-Cutting cloth Department Rp. 4.000.000

Conversion cost-Cutting cloth Department Rp. 4.000.000

3. To record WO 505 had finished and transferred to Checking Edges Department, WO 506 had finished and transferred
to Sewing Body Department.

WIP Inventory-Checking Edges Department Rp.6.000.000

WIP Inventory-Sewing Body Department Rp.6.000.000

WIP inventory-Cutting cloth Department Rp. 12.000.000

WO 505 WO 506 Total

DM 5.000.000 3.000.000 8.000.000
Convertion Cost 1.000.000 3.000.000 4.000.000
Total 6.000.000 6.000.000 12.000.000
3. Journal entries
4. Journal to record Convertion cost at Checking Edges for WO 505
WIP Inventory-Checking Edges Department Rp.500.000
Conversion cost-Checking Edges Department Rp.500.000

5. Journal to record WO 505 had finished in Checking Edges Department and transferred to Sewing body Department
WIP Inventory-Sewing Body Department Rp.6.500.000
WIP Inventory-Checking Edges Department Rp.6.500.000

6. Journal to record using additional material in Sewing Body Department for each, Rp. 2.500.000 for WO 505 and Rp.
2.000.000 for WO 506
WIP Inventory-Sewing Body Department Rp. 4.500.000
Raw Material Inventory Rp. 4.500.000
7. Journal to record Conversion cost for each product at Sewing Body Department, Rp. 1.000.000 for WO505 and
Rp.1.500.000 dor WO506
WIP Inventory-Sewing Body Department Rp. 2.500.000
Conversion cost-Sewing Body Department Rp. 2.500.000
3. Journal entries
8. Journal for recorded WO 505 had finished in Sewing Body Department and transferred to Checking
Seams Department, and WO506 had finished in Sewing Body Department and Transferred to Machine
sewing of collars and lapels Department
WIP Inventory-Checking Seams Department Rp. 10.000.000
WIP Inventory-Machine sewing of collars
and lapels Department Rp. 9.500.000
WIP Inventory-Sewing Body Department Rp. 19.500.000

WO 505 WO 506
WIP-Checking Edges 6.500.000
WIP-Cutting Cloth Department 6.000.000
Raw Material Cost 2.500.000 2.000.000
Conversion Cost 1.000.000 1.500.000
total 10.000.000 9.500.000
3. Journal entries
9. Journal to record Conversion cost At Checking Seams Department Rp. 750.000 for WO505
WIP Inventory-Checking Seams Department Rp.750.000
Conversion cost- Checking Seams Department Rp.750.000

10. Journal to record WO505 had finished at Checking Seams Department and transferred to Handsewing
of collars and lapels Department.
WIP Inventory-hand sewing of collars
and lapels Department Rp. 10.750.000
WIP Inventory-Checking Seams Department Rp. 10.750.000

11. Journal to record conversion cost at Machine sewing of collars and lapels Department Rp. 1.200.000 for
WO506
WIP Inventory-Machine sewing of collars
and lapels Department Rp. 1.200.000
Conversion Cost at Machine Sewing of Collars and
Lapels Department Rp. 1.200.000
3. Journal entries

12. Journal to record WO506 had finished and transferred to Finished Good Warehouse
Finished Good Inventory Rp.10.700.000
WIP Inventory-Machine sewing of collars
and lapels Department
Rp.10.700.000

WIP Inventory- Sewing Body Department 9.500.000

Conversion cost- Machine sewing of collars 1.200.000
and lapels Department
Total 10.700.000

13. Journal to record Conversion cost at Handsewing of collars and lapels Department Rp.500.000 for
WO505.
WIP Inventory-hand sewing of collars-
and lapels Department Rp.650.000
Conversion Cost-hand sewing of collars-
and lapels Department Rp.650.000
3. Journal entries

14. Journal to record WO505 had finished and transferred to Finished Good Warehouse
Finished Good Inventory Rp.11.400.000
WIP Inventory-Hand sewing of collars
and lapels Department Rp.11.400.000

WIP Inventory-Checking Seams Department Rp. 10.750.000

Conversion Cost-hand sewing of collars and Rp.650.000
lapels Department
Total Rp.11.400.000