JOB ORDER COSTING

Job order costing procedures may be summarized as follows:

1. Job order costing applied to cost as follows

a. Direct materials and direct labor costs are traced to a particular job.

b. Cost not directly traceable (overhead) are applied to individual job using a predetermined overhead
application rate.

2. The overhead rate is a predetermined yearly rate using as base:

(1) labor hours,

(2) machine hours, or

(3) labor cost.

3. Practically, the difference between overhead applied and actual overhead is closed to cost of goods
sold at the end of period.

Work-in process - beginning Pxx

Direct materials xx

Direct labor xx

Applied manufacturing overhead xx

Indirect materials (directly identified) xx

Total cost of Job Order No. Pxx