presentation on Job Order costing

transcript

Cost Cost AccountingAccounting

A Presentation A Presentation ByBy

“ “Against The Against The Dawn”Dawn”

Group MembersGroup Members

• Mudassar Ali Mudassar Ali (Group Leader)(Group Leader)• Aamir ImraniAamir Imrani• Qaim DeenQaim Deen• Usman Ali QadirUsman Ali Qadir• Uzair UrqamUzair Urqam• Ghulam Mahu Ud DeenGhulam Mahu Ud Deen

Job Order Cost Job Order Cost SystemSystem

Ghulam Mahu-ud-DeenGhulam Mahu-ud-Deen(51)

Job Order Cost Job Order Cost SystemSystem

• 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 SheetJob Cost Sheet

Materials Requisition Materials Requisition FormForm

Time Ticket

Qaim DeenQaim Deen(05)

Objective 1Objective 1Objective 1Objective 1

Distinguish between job order costing and process costing

Cost SystemsCost Systems

• There are two basic systems used by manufacturers to assign costs to their products:– Job order costing– Process costing

Comparing Job Order and Process Production

Job Order Systems

• Custom orders

• Heterogeneous products

• Low production volume

• High product flexibility

Process Systems

• Repetitive production

• Homogeneous products

• High production volume

• Low product flexibility

a. A manufacturer of plywood would use

b. A manufacturer of wakeboards would use

c. A manufacturer of luxury yachts would use

d. A professional services firm would use

e. A landscape garden contractor would use

process costing.

job costing.

Mudassar AliMudassar Ali(14)

Record materials and labor in a job order costing system

Work in Process

Cost of GoodsSold

Materials

FinishedGoods

FactoryOverhead

Direct

Allocate

Cost FlowCost FlowIn

Raw MaterialsMaterial

PurchasesDirectDirect

MaterialMaterialDirectDirect

MaterialMaterial

Accounting for Accounting for MaterialsMaterials

ActualOverhead

Indirect Material

Manufacturing Overhead

Work in Process

GENERAL JOURNALDATE DESCRIPTION REF DEBIT CREDIT

Materials inventory – canvas 70,000

Accounts payable 70,000

Materials inventory – thread 1,000

Date Units Cost Total Mat Req No Units Cost Total Units Cost Total

SUBSIDIARY MATERIALS LEDGER RECORD

Received Used BalanceItem No._________ Description: ______________________C865 Canvas (black)

7/10 7000 $10 70,000 7000 $10 70,000

Date Units Cost Total Mat Req No Units Cost Total Units Cost Total

Received Used BalanceItem No._________ Description: ______________________

SUBSIDIARY MATERIALS LEDGER RECORD

T444 Thread (black)

7/10 50 $20 1,000 50 $20 1,000

Materials RequisitionMaterials Requisition• Used to authorize the use of materials

on a job

• Serves as source document for recording material usage

Item no. Item Quantity Unit cost Amount

MATERIALS REQUISITION NO. _____Date: _______ Job No. _____

89668/03

C865 Black canvas 6,300 $10 63,000

T444 Black thread 15 $20 300 Total 63,300

Work in process inventory 63,000

Materials inventory-canvas 63,000

(for direct materials)

Manufacturing overhead 300

Materials inventory-thread 300

(for indirect materials)

Raw MaterialsBeginning bal 35,000Purchases 70,000

1,000 63,300 Requisitioned

Ending bal 42,700

Job Cost RecordJob Cost RecordJob Cost Record

Job No.Customer Name and AddressJob DescriptionDate Promised Date Started Date Completed

Direct Materials Direct Labor Overhead Costs Applied

DateRequisi-tion No. Amount

Time Ticket

No. Amount Date Rate Amount

Overall Cost SummaryMaterialsLaborOverhead

Totals Total Job Cost

562Happy Campers

2,000 backpacks

8/03 8966 63,000

Work in ProcessIncurred Direct

Material

Manufacturing Wages

Accounting for LaborAccounting for Labor

Manufacturing OverheadActual

OverheadCosts

Indirect Labor

DirectDirectLaborLabor

Labor Time TicketLabor Time TicketLABOR TIME RECORD

Employee ___________ No. ______Job _______

Time: Started: ___________ Rate: ____________ Stopped: __________ Cost of Labor Elapsed: __________ Charged to Job $___________

Employee: _J K ___________ Supervisor: M . M orley

J. Khan K13

8001500

7 hours

$11.25

$78.75

GENERAL JOURNAL

DATE DESCRIPTION REF DEBIT CREDIT

Manufacturing wages 76,500

Wages payable76,500

($600 + $900 + $75,000)

Work in process 75,900

Manufacturing overhead 600

Manufacturing wages76,500

Usman Ali Qadir(29)

Record overhead in a job order costing system

Work in ProcessDirectDirect

MaterialMaterial

Accounting for Accounting for Manufacturing Manufacturing

OverheadOverheadManufacturing OverheadActual

OverheadCosts

OverheadOverheadApplied to Applied to

Work inWork inProcessProcess

OverheadOverhead

DirectDirectLaborLabor

Total estimated manufacturing overhead costs

Total estimated quantity of the manufacturing overhead allocation base

Predetermined Predetermined Manufacturing Manufacturing Overhead RateOverhead Rate

Allocate Manufacturing Allocate Manufacturing OverheadOverhead

Predetermined manufacturing overhead x Actual quantity of the allocation based used by each job

Total estimated manufacturing overhead costs

Total estimated quantity of the manufacturing overhead allocation base

$100,000 / $80,000 = $1.25 per direct labor dollar

Work in process 80,000,

Manufacturing overhead80,000

Amount to allocate to the job:

$1.25 x $64,000 = $80,000

Manufacturing OverheadActual Overhead 83,000 80,000 Overhead Applied

Balance 3,000

Cost of goods sold 3,000

Manufacturing overhead 3,000

Aamir ImraniAamir Imrani(29)

Record completion and sales of finished goods and the adjustment

for under- or overallocated overhead

Work in Process•Direct MaterialDirect Material

•Direct LaborDirect Labor

•Manufacturing Manufacturing OverheadOverhead

Finished Goods

Cost of Goods

Manufactured

Cost of Goods Sold

Cost ofGoodsSold

Cost of Goods Sold

Accounting for Finished Accounting for Finished GoodsGoods

Cost of Goods

Manufactured

Materials Finished goods17,000 Job 90- 44,000

Work in process

61,000

GENERAL JOURNAL

a. Accounts payable 81,000

Cash 81,000

b. Marketing & general expense 22,000

Cash 22,000

Materials Finished goods17,000 Job 90- 44,000

Work in process

61,000

GENERAL JOURNAL

c. Cash 195,000

Accounts receivable 195,000

d. Materials inventory 55,000

55,000

Materials Finished goods17,000 44,000

Work in process

61,000

GENERAL JOURNAL

e. Work in process-job 90 4,000

Work in process-job 91 38,000

Materials inventory 49,000

55,00049,000

42,000

Job Cost RecordJob No.Customer Name and AddressJob DescriptionDate Promised Date Started Date Completed

Time Ticket

91Wicom Company

components

e. 8966 38,000

Work in process

61,000

GENERAL JOURNAL

f. Manufacturing wages 56,000

Wages payable 56,000

Wages payable 50,500

Cash 50,500

55,00049,000

42,000

Work in process

61,000

GENERAL JOURNAL

g. Work in process-job 90 6,000

Manufacturing wages 56,000

55,00049,000

42,00034,000

Time Ticket

91Wicom Company

components

e. 8966 38,000g. T523 28,000

Work in process

61,000

GENERAL JOURNAL

h. Manufacturing overhead 7,500

Accumulated depreciation,plant & equipment 7,500

55,00049,000

42,00034,000

Work in process

61,000

GENERAL JOURNAL

i. Work in process-job 90 7,200

55,00049,000

42,00034,00040,800

Time Ticket

91Wicom Company

components

e. 8966 38,000g. T523 28,000

i. 120% 33,600

Work in process

61,000

GENERAL JOURNAL

j. Finished goods inventory 61,200

55,00049,000

42,00034,00040,800

Job 90: In process, beginning $44,000Direct materials added 4,000Direct labor added 6,000Overhead applied (6,000 x 120%) 7,200 $61,200

61,20061,200

Work in process

61,000

GENERAL JOURNAL

k. Accounts receivable 125,000

Sales revenue 125,000

Finished goods inventory 61,200

55,00049,000

42,00034,00040,800

61,20061,200 61,200

e. 7,000

Manufacturing overhead

GENERAL JOURNAL

l. Manufacturing overhead 4,300

g.22,000h. 7,500

i. 40,800

Bal 4,300 4,300

Work in process

61,00055,000

49,00042,00034,00040,800

61,20061,200 61,200

23,000

99,600

61,000

Uzair UrqamUzair Urqam(41)

Calculate unit costs for a service company

1. Direct labor cost rate:$2,550,000 / 17,000 hrs = $150

Indirect cost allocation rate:Office rent $300,000Support staff salaries 900,000Utilities 330,000 Total $1,530,000

Rate: $1,530,000 / $2,550,000 = 60%

2. Predicted cost of job:

Direct labor (220 hrs x $150) $33,000

Indirect cost allocation ($33,000 x 60%) 19,800

$52,800

3.Bid:

Cost$52,800

Desired profit(50%) $26,400

$79,200

I’m thinking about some leisure time

So “No Questions” Please!!!!!!!

End of Job Order End of Job Order CostingCosting

presentation on Job Order costing

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