Cost Accounting

Chapter 5
Job Order Costing
Learning Objectives
1. Perform job order cost accumulation.
2. Identify and prepare the eight basic cost accounting
entries involved in job order costing.
3. Prepare a job order cost sheet.
4. Use a predetermined overhead rate in job order
costing.
5. Recognize job order cost sheets in a variety of forms,
for both manufacturing and service businesses.

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5-1 Overview of Job Order Costing
• In job costing, production costs are accumulated for
each separate job.
• job order cost sheet
• cost sheet

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FIGURE 5-1 Cost Sheet for a
Nondepartmentalized Plant

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a publicly accessible website, in whole or in part. 4
5-1 Overview of Job Order Costing
• The basics of job order costing involve only eight
types of accounting entries, one for each of the
following:
1. Materials purchased
2. Factory labor costs incurred
3. Factory overhead costs incurred
4. Materials used
5. Factory labor costs distributed
6. Estimated factory overhead applied
7. Jobs completed
8. Products sold
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FIGURE 5-2 Work in Process, Finished Goods, and
Cost of Goods Sold Accounts of Rayburn Company

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5-2 Accounting for Materials
• Materials Purchased

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FIGURE 5-3 Materials Purchased and
Used

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5-2 Accounting for Materials
• Materials Used
– materials requisitions

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5-3 Accounting for Labor
• In many companies, a time clock registers each
employee on an individual clock card, which may be
on paper or in electronic form, when the employee
enters and leaves the facility.
• Clock cards thus show the amount of time worked
and are used to compute earnings of hourly wage
earners.
• To identify direct and indirect labor cost, each worker
prepares one or more labor time tickets.

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5-3 Accounting for Labor
• Factory Labor Cost Incurred
• Factory Labor Costs Distributed

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FIGURE 5-4 Labor Cost

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5-4 Accounting for Factory Overhead
• Factory overhead consists of all costs that are not
traced directly to jobs but are incurred in production.

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5-4 Accounting for Factory Overhead
• Estimated Factory Overhead Applied
– overhead allocation base
– base
– predetermined overhead rate

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5-5 Accounting for Jobs Completed and
Products Sold
• As jobs are completed, their cost sheets are moved
from the in-process category to a finished work file.

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FIGURE 5-5 Actual Overhead Incurred
and Estimated Overhead Applied

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FIGURE 5-6 Job Cost Sheet for a Service
Business

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