Mailisa Putri 1010532076
Leonie Aloysyania 1110532013
• Explain how hybrid costing systems develop in relation
to production systems
• Develop an understanding for an operation costing
• Prepare journal entries for an operation costing systems
• Described a Just-In-Time production systems
• Identify the major features of a Just-In-Time production
• Explain how Just-In-Time systems simplify job costing
• Described Journal entries for Backflush Costing systems
Hybrid costing employs some aspects
of both job-order and process costing.
Job-order Costing Hybrid Costing Process Costing
(Products produced in batches)
identifiable unit of
a product or
Masses of similar
product units or
service units
 Overview of Operation Costing
 An Illustration of Operation Costing

An operation is a standardized method or
technique that is perform repetitively regardless
of the distinguishing features of the finished

Operation costing is hybrid costing system
applied to batches of similar products. Each
batch of products is often a variation of a single
design and proceed through a sequence of
selected (though not necessarily the same)
activities or operations.
Work Order
Work Order 424
Direct Materials Wool Polyester
Satin full
Rayon partial
Plastics buttons
1 Cutting cloth use use
2 Checking edges use do not use
3 Sewing body use use
4 Checking seams use do not use
5 Machine sewing of collars and
Do not use use
6 Hand sewing of collars and lapels use do not use
Work Order 423 Work Order 424
Number of blazers 50 100
Direct material costs $6000 $3000
Conversion cost
Operation 1 580 1160
Operation 2 400 -
Operation 3 1900 3800
Operation 4 500 -
Operation 5 - 875
Operation 6 700 -
Total Manufacturing
$10080 $8835
For example;

Operation 1 Budgeted conversion cost rate =
Operation 1 budgeted conversion cost/ operation 1 budgeted product units
= $232,000/20,000 units
= $11.60 per units
1. Conversion cost $24,400
Various accounts(such us wages payable and
accumulated depreciation) $24,400
2. WIP, Operation 1 $2,975
Materials inventory control $2,975
3. WIP, Operation 1 $1,160
Conversion costs allocated $1,160
4. WIP, Operation 3 $4,135
WIP, Operation 1 $4,135
2. Direct Materials $2,975
3. Conversion cost allocated $1,160
4. Transferred to Operation 3 $4,135
Work In Process, Operation 1
JIT Production is a systems in which each
component on a production line is produced
immediately as needed by the next step in the
production line. In JIT production line,
manufacturing activity at any particular
workstation is prompted by the need for that
stations output at the following station.
• Production is organized in manufacturing cells, a grouping of
all the difference types of equipment used to manufacture a given
• Workers are trained to be multiskilled so that they are capable of
performing a variety of operations and tasks
• Total Quality Management is aggressively pursuade to
eliminated defects.
• Emphasis is placed on reducing set up time, which is the time
require to get equipment, tools, and materials ready to start the
production of a component or product, and manufacturing lead
time, which is the time from when an order is ready to start on
the production line to when it becomes a finished good.
• Suppliers are carefully selected to obtained delivery of quality-
tested parts in a timely manner
• Lower investment in inventories
• Reduction in carrying and handling cost of
• Reduction in risk of obsolescence of inventories
• Lower investment in plant spaced for inventories
and production
• Reduction in set up cost and total manufacturing
• Reduction in cost of waste and spoilage as a
result of improved quality
• Higher revenues as a result of responding faster
to the customer
• Reduction in paper work
In reducing the need for materials handling,
warehousing, inspection of supplies, and other
activities, JIT systems reduce overhead costs. JIT
systems also facilitated the direct tracing of some costs
that were formerly classified as over head. For example,
the use of manufacturing cells make it easy to traced
materials handling and machine operating costs to
specifics product or product families made in specific
cells. These costs than become direct costs of those
product. Also, the use of multiskilled workers in these
cells allows the costs of set up, minor maintenance, and
quality inspection to become easily traced, direct costs.
An alternative to the sequential tracking approach in
many costing systems is to delay the recording of journal
entries until after the physical sequences have occured.

Backflush costing (also called delayed costing, end point
costing, or post deduct costing) describeds a costing
systems that delays recording changes in the status of a
product being produced until good finished units appear,
it then uses budgeted or standard costs to work backward
to flush out manufacturing costs for the units produced.
In companies that adopt backflush costing, the
following occurs:
 Management wants a simple accounting systems.
Detailed tracking of direct costs through each step of
the production systems to the point of completion is
deemed unnecessary
 Each product has a set of budgeted or standard costs
 Backflush costing reports approximately the same
financial results as sequential tracking would