Presentation On Job Order Costing
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Cost Accounting
A Presentation By “Against The Dawn”
Group Members (Group Leader) • Mudassar Ali • Aamir Imrani • Qaim Deen • Usman Ali Qadir • Uzair Urqam • Ghulam Mahu Ud Deen
Job Order Cost System
Ghulam Mahu-ud-Deen (51)
Job Order Cost System • The job order cost system is used when products are made based on specific customer orders • Each product produced is considered a job • Costs are tracked by job • Services rendered can also be considered a job
Job Order Cost System • Purpose • Job Order Categories • End Items • Real Property Construction • Real Property Items • Low Dollar Like Items
Job Cost Sheet
Materials Requisition Form
Time Ticket
Qaim Deen (05)
Objective 1 Distinguish between job order costing and process costing
12
Cost Systems • There are two basic systems used by manufacturers to assign costs to their products: – Job order costing – Process costing
13
Comparing Job Order and Process Production Job Order Systems Process Systems • Custom orders
• Repetitive production
• Heterogeneous products
• Homogeneous products
• Low production volume
• High production volume
• High product flexibility
• Low product flexibility
a. A manufacturer of plywood would use process costing. b. A manufacturer of wakeboards would use process costing. c. A manufacturer of luxury yachts would use job costing. d. A professional services firm would use job costing. e. A landscape garden contractor would use job costing. 15
Mudassar Ali (14)
Objective 2 Record materials and labor in a job order costing system
17
Cost Flow Indirect
Materials
Direct
Indirect
Factory Allocate Overhead
Labor
Direct
Work in Process
Finished Goods
Cost of Goods Sold 18
Accounting for Materials Work in Process Raw Materials Material Direct Purchases Material Indirect Material
Direct Material
Manufacturing Overhead Actual Overhead Costs
19
GENERAL JOURNAL DATE
DESCRIPTION
REF
DEBIT
Materials inventory – canvas Accounts payable
70,000
Materials inventory – thread Accounts payable
1,000
CREDIT
70,000
1,000
20
SUBSIDIARY MATERIALS LEDGER RECORD
C865 Item No._________
Canvas (black) Description: ______________________
Received
Date 7/10
Units 7000
Used
Cost 70,000 Total $10
Mat Req No Units
Cost
Balance
Total 7000 Units$10Cost Total 70,000
SUBSIDIARY MATERIALS LEDGER RECORD
T444 Item No._________
Thread (black) Description: ______________________
Received
Date 7/10
Units 50
Cost $20
Total 1,000
Used Mat Req No Units
Cost
Balance
Total 50 Units$20 Cost1,000 Tota
21
Materials Requisition • Used to authorize the use of materials on a job • Serves as source document for recording material usage MATERIALS REQUISITION 8966 NO. _____ 8/03 562 _____ Date: _______ Job No. Item no. Item Quantity Unit cost Amount C865 T444
Black canvas Black thread Total
6,300 15
$10 $20
63,000 300 63,300
22
GENERAL JOURNAL DATE
DESCRIPTION
Work in process inventory Materials inventory-canvas (for direct materials) Manufacturing overhead Materials inventory-thread (for indirect materials)
REF
DEBIT
CREDIT
63,000 63,000
300 300
23
Raw Materials Beginning bal Purchases Ending bal
35,000 70,000 1,000 63,300
Requisitioned
42,700
24
Job Cost Record Job C ost R eco rd
562 Job N o. Happy Campers C ustom er N ame and Address 2,000 backpacks Job D escription D ate P rom ised D ate S tarted D ate C o m pleted D irect Materials D irect Labor Overhead C o sts Applied Tim e R equisiTicket D ate 8966 tion N o. 63,000 Am ount N o. Am ount D ate R ate Am ount 8/03
Overall C ost S um m ary Materials Labor 25 Overhead
Accounting for Labor Manufacturing Wages Incurred
Direct Labor Indirect Labor
Work in Process Direct Material Direct Labor
Manufacturing Overhead Actual Overhead Costs
26
Labor Time Ticket LABOR TIME RECORD J. Khan Employee ___________ Job J9738 _______ Time: 800 Started: ___________ 1500 Stopped: __________ 7 hours Elapsed: __________
Employee: _J K ___________
K13 No. ______
$11.25
Rate: ____________ Cost of Labor$78.75 Charged to Job $___________
M . M orley Supervisor:
27
GENERAL JOURNAL DATE
DESCRIPTION
Manufacturing wages Wages payable
REF
DEBIT
CREDIT
76,500
76,500 ($600 + $900 + $75,000) Work in process Manufacturing overhead Manufacturing wages
75,900 600
76,500 28
Usman Ali Qadir (29)
Objective 3 Record overhead in a job order costing system
30
Accounting for Manufacturing ManufacturingOverhead Overhead Work in Process Overhead Actual Overhead Applied to Work in Costs Process
Direct Material Direct Labor Overhead
Predetermined Manufacturing Overhead Rate Total estimated manufacturing overhead costs Total estimated quantity of the manufacturing overhead allocation base
32
Allocate Manufacturing Overhead Predetermined manufacturing overhead x Actual quantity of the allocation based used by each job
33
Total estimated manufacturing overhead costs Total estimated quantity of the manufacturing overhead allocation base $100,000 / $80,000 = $1.25 per direct labor dollar
34
Amount to allocate to the job: $1.25 x $64,000 = $80,000 GENERAL JOURNAL DATE
DESCRIPTION
Work in process Manufacturing overhead
REF
DEBIT
CREDIT
80,000,
80,000
35
Manufacturing Overhead Actual Overhead 83,000 Balance
80,000 Overhead Applied
3,000
36
GENERAL JOURNAL DATE
DESCRIPTION
Cost of goods sold Manufacturing overhead
REF
DEBIT
CREDIT
3,000 3,000
37
Aamir Imrani (29)
Objective 4 Record completion and sales of finished goods and the adjustment for under- or overallocated overhead
39
Accounting for Finished Goods Work in Process
•Direct Material •Direct Labor •Manufacturing Overhead
Cost of Goods Manufactured
Finished Goods
Cost of Cost of Goods Goods Sold Manufactured
Cost of Goods Sold Cost of Goods Sold 40
Materials 17,000
Work in process Job 90- 44,000
Finished goods 61,000
GENERAL JOURNAL DATE
a.
b.
DESCRIPTION
REF
DEBIT
Accounts payable Cash
81,000
Marketing & general expense Cash
22,000
CREDIT
81,000
22,000 41
Materials 17,000 55,000
Work in process Job 90- 44,000
Finished goods 61,000
GENERAL JOURNAL DATE
c.
d.
DESCRIPTION
Cash Accounts receivable Materials inventory Accounts payable
REF
DEBIT
CREDIT
195,000 195,000 55,000 55,000 42
Materials 17,000 49,000 55,000
Work in process 44,000 42,000
Finished goods 61,000
GENERAL JOURNAL DATE
e.
DESCRIPTION
Work in process-job 90 Work in process-job 91 Manufacturing overhead Materials inventory
REF
DEBIT
CREDIT
4,000 38,000 7,000 49,000
43
Job C ost R eco rd
Job N o. 91 Wicom Company C ustom er N ame and Address components Job D escription D ate P rom ised D ate S tarted D ate C o m pleted D irect Materials D irect Labor Overhead C o sts Applied Tim e R equisiTicket D ate 8966 tion N o. 38,000 Am ount N o. Am ount D ate R ate Am ount e.
Overall C ost S um m ary Materials Labor 44 Overhead
Materials 17,000 49,000 55,000
Work in process 44,000 42,000
Finished goods 61,000
GENERAL JOURNAL DATE
f.
DESCRIPTION
REF
DEBIT
Manufacturing wages Wages payable
56,000
Wages payable Cash
50,500
CREDIT
56,000
50,500 45
Materials 17,000 49,000 55,000
Work in process 44,000 42,000 34,000
Finished goods 61,000
GENERAL JOURNAL DATE
g.
DESCRIPTION
Work in process-job 90 Work in process-job 91 Manufacturing overhead Manufacturing wages
REF
DEBIT
CREDIT
6,000 28,000 22,000 56,000
46
Job C ost R eco rd
91 Job N o. Wicom Company C ustom er N ame and Address components Job D escription D ate P rom ised D ate S tarted D ate C o m pleted D irect Materials D irect Labor Overhead C o sts Applied Tim e R equisiTicket D 8966 tion N o. 38,000 Am ount N o. Am ount D ate R ate Am ount e.ate T523 28,000 g.
Overall C ost S um m ary Materials Labor Overhead 47
Materials 17,000 49,000 55,000
Work in process 44,000 42,000 34,000
Finished goods 61,000
GENERAL JOURNAL DATE
h.
DESCRIPTION
Manufacturing overhead Accumulated depreciation, plant & equipment
REF
DEBIT
CREDIT
7,500 7,500
48
Materials 17,000 49,000 55,000
Work in process 44,000 42,000 34,000 40,800
Finished goods 61,000
GENERAL JOURNAL DATE
i.
DESCRIPTION
Work in process-job 90 Work in process-job 91 Manufacturing overhead
REF
DEBIT
CREDIT
7,200 33,600 40,800
49
Job C ost R eco rd
91 Job N o. Wicom Company C ustom er N ame and Address components Job D escription D ate P rom ised D ate S tarted D ate C o m pleted D irect Materials D irect Labor Overhead C o sts Applied Tim e R equisiTicket D 8966 tion N o. 38,000 Am ount N o. Am ount D ate R ate Am ount e.ate T523 28,000 g. 120% 33,600 i.
Overall C ost S um m ary Materials Labor Overhead 50
Materials 17,000 49,000 55,000
Work in process 44,000 61,200 42,000 34,000 40,800
Finished goods 61,000 61,200
GENERAL JOURNAL
DATE
j.
Job 90: DESCRIPTION REF DEBIT CREDIT In process, beginning $44,000 Finished goods added inventory 61,200 Direct materials 4,000 Direct labor added 6,000 61,200 Work in process-job 90 Overhead applied (6,000 x 120%) 7,200 $61,200
51
Materials 17,000 49,000 55,000
Work in process 44,000 61,200 42,000 34,000 40,800
Finished goods 61,000 61,200 61,200
GENERAL JOURNAL DATE
k.
DESCRIPTION
Accounts receivable Sales revenue Cost of goods sold Finished goods inventory
REF
DEBIT
CREDIT
125,000 125,000 61,200 61,200 52
Manufacturing overhead e. 7,000 i. 40,800 g.22,000 h. 7,500 4,300 Bal 4,300 Bal
0
GENERAL JOURNAL DATE
l.
DESCRIPTION
Manufacturing overhead Cost of goods sold
REF
DEBIT
CREDIT
4,300 4,300
53
Materials 17,000 49,000 55,000 23,000
Work in process 44,000 61,200 42,000 34,000 40,800 99,600
Finished goods 61,000 61,200 61,200 61,000
54
Uzair Urqam (41)
Objective 5 Calculate unit costs for a service company
56
1. Direct labor cost rate: $2,550,000 / 17,000 hrs = $150 Indirect cost allocation rate: Office rent Support staff salaries Utilities Total
$300,000 900,000 330,000 $1,530,000
Rate: $1,530,000 / $2,550,000 = 60% 57
2. Predicted cost of job: Direct labor (220 hrs x $150) Indirect cost allocation ($33,000 x 60%) $52,800
$33,000 19,800
58
3. Bid: Cost Desired profit(50%)
$52,800 $26,400 $79,200
59
End of Job Order Costing
I’m thinking about some leisure time So “No Questions” Please!!!!!!!
A Presentation By “Against The Dawn”
Group Members (Group Leader) • Mudassar Ali • Aamir Imrani • Qaim Deen • Usman Ali Qadir • Uzair Urqam • Ghulam Mahu Ud Deen
Job Order Cost System
Ghulam Mahu-ud-Deen (51)
Job Order Cost System • The job order cost system is used when products are made based on specific customer orders • Each product produced is considered a job • Costs are tracked by job • Services rendered can also be considered a job
Job Order Cost System • Purpose • Job Order Categories • End Items • Real Property Construction • Real Property Items • Low Dollar Like Items
Job Cost Sheet
Materials Requisition Form
Time Ticket
Qaim Deen (05)
Objective 1 Distinguish between job order costing and process costing
12
Cost Systems • There are two basic systems used by manufacturers to assign costs to their products: – Job order costing – Process costing
13
Comparing Job Order and Process Production Job Order Systems Process Systems • Custom orders
• Repetitive production
• Heterogeneous products
• Homogeneous products
• Low production volume
• High production volume
• High product flexibility
• Low product flexibility
a. A manufacturer of plywood would use process costing. b. A manufacturer of wakeboards would use process costing. c. A manufacturer of luxury yachts would use job costing. d. A professional services firm would use job costing. e. A landscape garden contractor would use job costing. 15
Mudassar Ali (14)
Objective 2 Record materials and labor in a job order costing system
17
Cost Flow Indirect
Materials
Direct
Indirect
Factory Allocate Overhead
Labor
Direct
Work in Process
Finished Goods
Cost of Goods Sold 18
Accounting for Materials Work in Process Raw Materials Material Direct Purchases Material Indirect Material
Direct Material
Manufacturing Overhead Actual Overhead Costs
19
GENERAL JOURNAL DATE
DESCRIPTION
REF
DEBIT
Materials inventory – canvas Accounts payable
70,000
Materials inventory – thread Accounts payable
1,000
CREDIT
70,000
1,000
20
SUBSIDIARY MATERIALS LEDGER RECORD
C865 Item No._________
Canvas (black) Description: ______________________
Received
Date 7/10
Units 7000
Used
Cost 70,000 Total $10
Mat Req No Units
Cost
Balance
Total 7000 Units$10Cost Total 70,000
SUBSIDIARY MATERIALS LEDGER RECORD
T444 Item No._________
Thread (black) Description: ______________________
Received
Date 7/10
Units 50
Cost $20
Total 1,000
Used Mat Req No Units
Cost
Balance
Total 50 Units$20 Cost1,000 Tota
21
Materials Requisition • Used to authorize the use of materials on a job • Serves as source document for recording material usage MATERIALS REQUISITION 8966 NO. _____ 8/03 562 _____ Date: _______ Job No. Item no. Item Quantity Unit cost Amount C865 T444
Black canvas Black thread Total
6,300 15
$10 $20
63,000 300 63,300
22
GENERAL JOURNAL DATE
DESCRIPTION
Work in process inventory Materials inventory-canvas (for direct materials) Manufacturing overhead Materials inventory-thread (for indirect materials)
REF
DEBIT
CREDIT
63,000 63,000
300 300
23
Raw Materials Beginning bal Purchases Ending bal
35,000 70,000 1,000 63,300
Requisitioned
42,700
24
Job Cost Record Job C ost R eco rd
562 Job N o. Happy Campers C ustom er N ame and Address 2,000 backpacks Job D escription D ate P rom ised D ate S tarted D ate C o m pleted D irect Materials D irect Labor Overhead C o sts Applied Tim e R equisiTicket D ate 8966 tion N o. 63,000 Am ount N o. Am ount D ate R ate Am ount 8/03
Overall C ost S um m ary Materials Labor 25 Overhead
Accounting for Labor Manufacturing Wages Incurred
Direct Labor Indirect Labor
Work in Process Direct Material Direct Labor
Manufacturing Overhead Actual Overhead Costs
26
Labor Time Ticket LABOR TIME RECORD J. Khan Employee ___________ Job J9738 _______ Time: 800 Started: ___________ 1500 Stopped: __________ 7 hours Elapsed: __________
Employee: _J K ___________
K13 No. ______
$11.25
Rate: ____________ Cost of Labor$78.75 Charged to Job $___________
M . M orley Supervisor:
27
GENERAL JOURNAL DATE
DESCRIPTION
Manufacturing wages Wages payable
REF
DEBIT
CREDIT
76,500
76,500 ($600 + $900 + $75,000) Work in process Manufacturing overhead Manufacturing wages
75,900 600
76,500 28
Usman Ali Qadir (29)
Objective 3 Record overhead in a job order costing system
30
Accounting for Manufacturing ManufacturingOverhead Overhead Work in Process Overhead Actual Overhead Applied to Work in Costs Process
Direct Material Direct Labor Overhead
Predetermined Manufacturing Overhead Rate Total estimated manufacturing overhead costs Total estimated quantity of the manufacturing overhead allocation base
32
Allocate Manufacturing Overhead Predetermined manufacturing overhead x Actual quantity of the allocation based used by each job
33
Total estimated manufacturing overhead costs Total estimated quantity of the manufacturing overhead allocation base $100,000 / $80,000 = $1.25 per direct labor dollar
34
Amount to allocate to the job: $1.25 x $64,000 = $80,000 GENERAL JOURNAL DATE
DESCRIPTION
Work in process Manufacturing overhead
REF
DEBIT
CREDIT
80,000,
80,000
35
Manufacturing Overhead Actual Overhead 83,000 Balance
80,000 Overhead Applied
3,000
36
GENERAL JOURNAL DATE
DESCRIPTION
Cost of goods sold Manufacturing overhead
REF
DEBIT
CREDIT
3,000 3,000
37
Aamir Imrani (29)
Objective 4 Record completion and sales of finished goods and the adjustment for under- or overallocated overhead
39
Accounting for Finished Goods Work in Process
•Direct Material •Direct Labor •Manufacturing Overhead
Cost of Goods Manufactured
Finished Goods
Cost of Cost of Goods Goods Sold Manufactured
Cost of Goods Sold Cost of Goods Sold 40
Materials 17,000
Work in process Job 90- 44,000
Finished goods 61,000
GENERAL JOURNAL DATE
a.
b.
DESCRIPTION
REF
DEBIT
Accounts payable Cash
81,000
Marketing & general expense Cash
22,000
CREDIT
81,000
22,000 41
Materials 17,000 55,000
Work in process Job 90- 44,000
Finished goods 61,000
GENERAL JOURNAL DATE
c.
d.
DESCRIPTION
Cash Accounts receivable Materials inventory Accounts payable
REF
DEBIT
CREDIT
195,000 195,000 55,000 55,000 42
Materials 17,000 49,000 55,000
Work in process 44,000 42,000
Finished goods 61,000
GENERAL JOURNAL DATE
e.
DESCRIPTION
Work in process-job 90 Work in process-job 91 Manufacturing overhead Materials inventory
REF
DEBIT
CREDIT
4,000 38,000 7,000 49,000
43
Job C ost R eco rd
Job N o. 91 Wicom Company C ustom er N ame and Address components Job D escription D ate P rom ised D ate S tarted D ate C o m pleted D irect Materials D irect Labor Overhead C o sts Applied Tim e R equisiTicket D ate 8966 tion N o. 38,000 Am ount N o. Am ount D ate R ate Am ount e.
Overall C ost S um m ary Materials Labor 44 Overhead
Materials 17,000 49,000 55,000
Work in process 44,000 42,000
Finished goods 61,000
GENERAL JOURNAL DATE
f.
DESCRIPTION
REF
DEBIT
Manufacturing wages Wages payable
56,000
Wages payable Cash
50,500
CREDIT
56,000
50,500 45
Materials 17,000 49,000 55,000
Work in process 44,000 42,000 34,000
Finished goods 61,000
GENERAL JOURNAL DATE
g.
DESCRIPTION
Work in process-job 90 Work in process-job 91 Manufacturing overhead Manufacturing wages
REF
DEBIT
CREDIT
6,000 28,000 22,000 56,000
46
Job C ost R eco rd
91 Job N o. Wicom Company C ustom er N ame and Address components Job D escription D ate P rom ised D ate S tarted D ate C o m pleted D irect Materials D irect Labor Overhead C o sts Applied Tim e R equisiTicket D 8966 tion N o. 38,000 Am ount N o. Am ount D ate R ate Am ount e.ate T523 28,000 g.
Overall C ost S um m ary Materials Labor Overhead 47
Materials 17,000 49,000 55,000
Work in process 44,000 42,000 34,000
Finished goods 61,000
GENERAL JOURNAL DATE
h.
DESCRIPTION
Manufacturing overhead Accumulated depreciation, plant & equipment
REF
DEBIT
CREDIT
7,500 7,500
48
Materials 17,000 49,000 55,000
Work in process 44,000 42,000 34,000 40,800
Finished goods 61,000
GENERAL JOURNAL DATE
i.
DESCRIPTION
Work in process-job 90 Work in process-job 91 Manufacturing overhead
REF
DEBIT
CREDIT
7,200 33,600 40,800
49
Job C ost R eco rd
91 Job N o. Wicom Company C ustom er N ame and Address components Job D escription D ate P rom ised D ate S tarted D ate C o m pleted D irect Materials D irect Labor Overhead C o sts Applied Tim e R equisiTicket D 8966 tion N o. 38,000 Am ount N o. Am ount D ate R ate Am ount e.ate T523 28,000 g. 120% 33,600 i.
Overall C ost S um m ary Materials Labor Overhead 50
Materials 17,000 49,000 55,000
Work in process 44,000 61,200 42,000 34,000 40,800
Finished goods 61,000 61,200
GENERAL JOURNAL
DATE
j.
Job 90: DESCRIPTION REF DEBIT CREDIT In process, beginning $44,000 Finished goods added inventory 61,200 Direct materials 4,000 Direct labor added 6,000 61,200 Work in process-job 90 Overhead applied (6,000 x 120%) 7,200 $61,200
51
Materials 17,000 49,000 55,000
Work in process 44,000 61,200 42,000 34,000 40,800
Finished goods 61,000 61,200 61,200
GENERAL JOURNAL DATE
k.
DESCRIPTION
Accounts receivable Sales revenue Cost of goods sold Finished goods inventory
REF
DEBIT
CREDIT
125,000 125,000 61,200 61,200 52
Manufacturing overhead e. 7,000 i. 40,800 g.22,000 h. 7,500 4,300 Bal 4,300 Bal
0
GENERAL JOURNAL DATE
l.
DESCRIPTION
Manufacturing overhead Cost of goods sold
REF
DEBIT
CREDIT
4,300 4,300
53
Materials 17,000 49,000 55,000 23,000
Work in process 44,000 61,200 42,000 34,000 40,800 99,600
Finished goods 61,000 61,200 61,200 61,000
54
Uzair Urqam (41)
Objective 5 Calculate unit costs for a service company
56
1. Direct labor cost rate: $2,550,000 / 17,000 hrs = $150 Indirect cost allocation rate: Office rent Support staff salaries Utilities Total
$300,000 900,000 330,000 $1,530,000
Rate: $1,530,000 / $2,550,000 = 60% 57
2. Predicted cost of job: Direct labor (220 hrs x $150) Indirect cost allocation ($33,000 x 60%) $52,800
$33,000 19,800
58
3. Bid: Cost Desired profit(50%)
$52,800 $26,400 $79,200
59
End of Job Order Costing
I’m thinking about some leisure time So “No Questions” Please!!!!!!!
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