Pangau, Timotius Vincent

Managerial Accounting
Paralel B
RKB chapter 2 and chapter 3

Job order costing is a costing method that based on the production of a product. The
advantage of job order costing is, it helps to calculate the cost per unit, and can find the detailed
information that is more accurate than other method. The purpose of the job order costing
calculation method is to calculate all costs, based on the order. Bill of material is a list containing
the materials needed to make or produce a product. Bill of material is also used as the basis for
calculating the selling price of the product. Materials requisition form is a document used by the
production department to request needed materials to complete a manufacturing process. The
form is used to control the flow of materials into the production.
Job cost sheet is a sheets with a custom column for the three elements of production cost
(materials, labor, and manufacturing overhead cost), that used to record the cost from the order.
Time ticket is a summary of the number of hours worked by employee’s throughout the day. The
purpose of time ticket is to accumulate the hours that an employee will be paid the next payroll.
An allocation base is a measure of machine hours or direct labor hours that is used to assign
overhead costs to product and service. A cost driver is any company’s activities that incurs or
cause overhead cost. In running a business, the company must have activities that cause overhead
cost such as computer time, flight hours, and machine hours. Overhead is applied to jobs, by
multiplying the predetermined overhead rate by the actual amount of the allocation base recorded
for each job, throughout the period.
Raw materials are raw materials that will go through the production process, which will
eventually become finished goods. Work in process is the stage where the raw materials are
processed, with the help of direct labor and manufacturing overhead, to finally can become a
finished goods. Finished goods are the complete goods that have passed the raw material stage
and work in process, and are ready to be sold to customers. Overapplied overhead is a credit
balance in the manufacturing overhead account that occurs when the amount of overhead cost
applied to work in process, exceeds the amount of overhead cost actually incurred.
Manufacturing overhead costs will be overstated when overhead is overapplied. So to make it
balance, cost of goods sold must be adjust downwards. Underapplied overhead is the opposite of
overapplied overhead. Underapplied overhead is a debit balance in the manufacturing overhead
account that occurs when the amount of overhead cost actually incurred, exceeds the amount of
overhead cost applied to work in process. Manufacturing overhead cost will be understated when
overhead is underapplied. So to make it balance, cost of goods sold must be adjust upwards.