Ch.

2: Job Order Costing

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1. accumulating -raw materials cost: debits the cost of 11. manufacturing - companies charge the actual cost of
manufacturing materials to raw materials inventory & no overhead direct materials and direct labor to specific
costs effort at this point to associate the cost of costs jobs. In contrast, manufacturing overhead
materials with specific jobs or orders relates to production operations as a whole.
-factory labor costs: companies debit labor - overhead costs cannot be assigned to
costs to factory labor as they incur those specific jobs on the basis of actual costs
costs incurred, instead companies assign
- manufacturing overhead costs manufacturing overhead in process and to
specific jobs on an estimated basis through
2. advantages A: more precise in assignment of costs to
the use of a predetermined overhead rate
and projects than process costing
disadvantages D: requires a significant amount of data entry 12. materials when requests for issuing raw materials are
of job order requisition slip made
costing
13. overapplied means that the overheard assigned to work
3. assigning companies recognize cost of goods sold overhead in process is greater than the overhead
costs to cost when each sale occurs incurred
of goods sold
14. predetermined estimated annual overhead costs /
4. assigning finished goods inventory is a control overhead rate expected annual operating activity
costs to account. It controls individual finished goods
15. process cost uses it when it manufactures a large volume
finished records in a finished goods subsidiary ledger
system of similar products (ex. manufacture of
goods
cereal by Kellogg, Ice Cream by Ben and
5. assigning - debits made to work in process inventory, Jerry's)
manufacturing credits made to raw materials inventory,
16. raw materials companies assign raw materials costs to
costs to work factory labor, and manufacturing overhead
cost jobs when the materials storeroom issues
in process
the materials in response to re requests
6. cost measuring, recording, and reporting product
17. something to *at the end of each month, the balance in
accounting costs
know work in process inventory should equal the
7. cost - consists of accounts for the various sum of the costs shown on the job cost
accounting manufacturing costs sheets of unfinished jobs
system - accounts are fully integrated into the
18. summary of accumulation, assignment to jobs (do not
general ledger of a company
job order cost assign overhead using actual overhead
- important feature is the use of the
flows costs, but instead use a predetermined rate)
perpetual inventory system (which provides
, completed jobs , when goods or sold
immediate, up-to-date information on the
cost of a product) 19. time ticket indicates the employee, the hours worked,
the account and job to be charged, and the
8. factory labor companies assign factory labor costs to jobs
total labor cost
costs on the basis of time tickets prepared when
the work is performed 20. underapplied means that the overhead assigned to work
overhead in process is less than the overhead
9. job cost sheet ^under assigning manufacturing cots to work
incurred
in process
- a form used to record the costs chargeable
to a specific job and to determine the total
unit costs of the completed job
10. job order cost the company assigns costs to each batch of
system goods (ex. the manufacture of a mainframe
computer by IBM, the production of a movie
by Disney, making of a fire truck by America
LaFrance)
*diagram pg. 50, 52