1. Chapter 5 Job Order Costing

2. Process Costing Job Order Costing  Used for production of large, unique, high-cost items.  Built to order rather than mass produced.  Many costs can be directly traced to each job. Basic Cost Accounting Procedures

3. Typical job order cost applications:  Special-order printing  Building construction Also used in service industry  Hospitals  Law firms Basic Cost Accounting Procedures Process Costing Job Order Costing

4.  Used for production of small, identical, low-cost items.  Mass produced in automated continuous production process.  Costs cannot be directly traced to each unit of product. Basic Cost Accounting Procedures Process Costing Job Order Costing

5. Typical process cost applications:  Petrochemical refinery  Paint manufacturer  Paper mill Basic Cost Accounting Procedures Process Costing Job Order Costing

6. THE JOB Direct materials Direct labor Traced directly to each job Manufacturing overhead (OH) Applied to each job using a predetermined rate (POHR) Job Order Costing

7. The primary document for tracking the costs associated with a given job is the job cost sheet. Let’s investigate Job Order Costing

8. The Job Cost Sheet

10. Accumulate direct labor costs by means of a work record, such as a time ticket, for each employee.

11. The Job Cost Sheet Apply manufacturing overhead to jobs using a predetermined overhead rate (POHR) based on direct labor hours (DLH).

12. questions

13. Exercise No.01 Classify these industries into Job order costing and process costing industries: a. Meatb. sugar c. Pianosd. steel e. Breakfast cerealsf. paper boxes g. Wood furnitureh. toys i. Cokej. cooking utensils k. Leatherl. paint m. Tyres and tubes.n. locomotives

14. Exercise No.02 Forge Machine works collects it cost data by the job order costing system. For job 642, the following data are available: Direct Material used: 14/9 issued$1,200 20/9 issued$ 668 22/9 issued$ 480 Direct Labour: 20/9 180 hours @$6.2/hrhours @$6.2/hr 26/9 140 hours@$7.3/hrhours@$7.3/hr Factory overhead is applied at the rate of $3.5 per direct labour hour. Required: 1.The appropriate information entered on job cost sheet. 2.The estimated sales price if markup is 40% of cost.

15. Exercise No.03 TedySung company produces special machines made to customers specifications. The following data pertain to job 1106: Customer: Markem machine shopDated: October 27 Dated started: 4/11/19---Customers order No. C696 Dated finished: 18/11/19—Description: 18 drilling machines Sales price: $20,425 11/1118/11 Materials used$2400$1300 Direct labour rate in dept 1$8.2 per$8.2 perhour Labour hour s usedin Dept 1300200 Direct labour rate in dept 2$8.00 per$8.00 perhour Labour hour s used in Dept 215070 Machine Hours in Dept 2.200120 Applied FOH in Dept 1 $4.00 per$4.00 perdirect lab hour Applied FOH in Dept 2 $1.80 per $1.80 permachine hour Marketing and admin expenses are charged to each order at a rate of 25% of the cost to manufacture. Required: Prepare a Job Cost Sheet for order number 1106.

16. Exercise No.04 Cambridge Company uses job order costing. At the beginning of May, two jobs were in process: Job No.369Job No.372 Materials$2,000$700 Direct labour$1,000$300 Applied factory overhead$1,500$450 During the month the following expenditures incurred on these jobs to complete them. Materials$10,000$5,000 Direct labour$15,000$3,500 Facto jry overhead$12,000$2,300 Markup20%30% Required: calculate the: 1.Total production cost of each job. 2.Sales price of each job.