job order slides cma
Post on 20-Oct-2014
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stages of production and flow of costTRANSCRIPT
Manufacturing Companies
There are 3 major categories of manufacturing costs:
There are 3 major categories of manufacturing costs:
Direct MaterialsRaw material,
parts, and components that can be observed
being used to make a specific product.
Direct MaterialsRaw material,
parts, and components that can be observed
being used to make a specific product.
Direct LaborThe cost of
paying employees who convert direct materials into
finished product.
Direct LaborThe cost of
paying employees who convert direct materials into
finished product.
Manufacturing Overhead
Manufacturing Overhead
Indirect materialIndirect material
Indirect laborIndirect labor
Other overheadOther overhead
Manufacturing Companies
Prime Costs include:Prime Costs include:
Direct MaterialsDirect Materials Direct LaborDirect Labor Manufacturing Overhead
Manufacturing Overhead
Manufacturing Companies
Conversion Costs include:Conversion Costs include:
Direct MaterialsDirect Materials Direct LaborDirect Labor Manufacturing Overhead
Manufacturing Overhead
Nonmanufacturing Costs are all the costs not used to produce products.
Nonmanufacturing Costs are all the costs not used to produce products.
Stages of Production and the Flow of Costs
Stages of Production and the Flow of Costs - Example
What is Ending What is Ending Inventory in Inventory in February?February?
What is Ending What is Ending Inventory in Inventory in February?February?
Axel Electronics makes toasters. On Axel Electronics makes toasters. On February 1, Axel has $15,000 of raw February 1, Axel has $15,000 of raw material on hand. Axel’s purchase material on hand. Axel’s purchase
and transfers to the production floor and transfers to the production floor are indicated below.are indicated below.
Axel Electronics makes toasters. On Axel Electronics makes toasters. On February 1, Axel has $15,000 of raw February 1, Axel has $15,000 of raw material on hand. Axel’s purchase material on hand. Axel’s purchase
and transfers to the production floor and transfers to the production floor are indicated below.are indicated below.
Axel Electronics makes toasters. On Axel Electronics makes toasters. On February 1, Axel has $15,000 of raw February 1, Axel has $15,000 of raw material on hand. Axel’s purchase material on hand. Axel’s purchase
and transfers to the production floor and transfers to the production floor are indicated below.are indicated below.
Axel Electronics makes toasters. On Axel Electronics makes toasters. On February 1, Axel has $15,000 of raw February 1, Axel has $15,000 of raw material on hand. Axel’s purchase material on hand. Axel’s purchase
and transfers to the production floor and transfers to the production floor are indicated below.are indicated below.
Stages of Production and the Flow of Costs - Example
Now let’s look at Now let’s look at Work-in-Process.Work-in-Process.
Now let’s look at Now let’s look at Work-in-Process.Work-in-Process.
Stages of Production and the Flow of Costs - Example
What is the What is the amount of cost amount of cost transferred to transferred to
Finished Goods in Finished Goods in February?February?
What is the What is the amount of cost amount of cost transferred to transferred to
Finished Goods in Finished Goods in February?February?
On February 1, Axel had WIP of $30,000 on the factory floor.
During February, Axel paid $92,000 in direct labor wages. Overhead is applied
at 150% of direct labor. On 2/28,
$22,000 is still in WIP.
On February 1, Axel had WIP of $30,000 on the factory floor.
During February, Axel paid $92,000 in direct labor wages. Overhead is applied
at 150% of direct labor. On 2/28,
$22,000 is still in WIP.
Stages of Production and the Flow of Costs - Example
On February 1, Axel had WIP of $30,000 on the factory floor.
During February, Axel paid $92,000 in direct labor wages. Overhead is applied
at 150% of direct labor. On 2/28,
$22,000 is still in WIP.
On February 1, Axel had WIP of $30,000 on the factory floor.
During February, Axel paid $92,000 in direct labor wages. Overhead is applied
at 150% of direct labor. On 2/28,
$22,000 is still in WIP.
Now let’s Now let’s look at look at
Finished Finished Goods.Goods.
Now let’s Now let’s look at look at
Finished Finished Goods.Goods.
Transferred Transferred to Finished to Finished
GoodsGoods
Stages of Production and the Flow of Costs - Example
On February 1, Axel had Finished Goods of $125,000 on hand. At the end of February, a physical inventory count revealed
$96,000 in Finished Goods still on hand.
What was Cost of Goods Sold for February?
On February 1, Axel had Finished Goods of $125,000 on hand. At the end of February, a physical inventory count revealed
$96,000 in Finished Goods still on hand.
What was Cost of Goods Sold for February?
Stages of Production and the Flow of Costs - Example
On February 1, Axel had Finished Goods of $125,000 on hand. At the end of February, a physical inventory count revealed
$96,000 in Finished Goods still on hand.
What was Cost of Goods Sold for February?
On February 1, Axel had Finished Goods of $125,000 on hand. At the end of February, a physical inventory count revealed
$96,000 in Finished Goods still on hand.
What was Cost of Goods Sold for February?
ProcessCosting
Job OrderCosting
Used for production of large, unique, high-cost items.
Built to order rather than mass produced.
Many costs can be directly traced to each job.
Basic Cost Accounting Procedures
Typical job order cost applications:
Special-order printing Building construction
Also used in service industry Hospitals Law firms
Basic Cost Accounting Procedures
ProcessCosting
Job OrderCosting
Used for production of small, identical, low-cost items.
Mass produced in automated continuous production process.
Costs cannot be directly traced to each unit of product.
Basic Cost Accounting Procedures
ProcessCosting
Job OrderCosting
Typical process cost applications:
Petrochemical refinery
Paint manufacturer
Paper mill
Basic Cost Accounting Procedures
ProcessCosting
Job OrderCosting
THE JOB
Directmaterials
Direct labor
Traced directly to each job
Traced directly
to each job
Manufacturingoverhead (OH)
Applied to eachjob using a
predeterminedrate (POHR)
Job Order Costing
The primary document for tracking the costs
associated with a given job is the job cost sheet.
Let’s investigate
Job Order Costing
The Job Cost SheetRoseCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-X9Date Completed
Department B3 Units CompletedItem Wooden cargo crate
Direct Materials Direct Labor Manufacturing OverheadReq. No. Amount Ticket Hours Amount Hours Rate Amount
Cost Summary Units ShippedDirect Materials Date Number BalanceDirect LaborManufacturing OverheadTotal CostUnit Cost
The Job Cost SheetRoseCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-X9Date Completed
Department B3 Units CompletedItem Wooden cargo crate
Direct Materials Direct Labor Manufacturing OverheadReq. No. Amount Ticket Hours Amount Hours Rate AmountX7-6890 116$
Cost Summary Units ShippedDirect Materials 116$ Date Number BalanceDirect LaborManufacturing OverheadTotal CostUnit Cost
The Job Cost SheetRoseCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-X9Date Completed
Department B3 Units CompletedItem Wooden cargo crate
Direct Materials Direct Labor Manufacturing OverheadReq. No. Amount Ticket Hours Amount Hours Rate AmountX7-6890 116$ 36 8 88$
Cost Summary Units ShippedDirect Materials 116$ Date Number BalanceDirect Labor 88$ Manufacturing OverheadTotal CostUnit Cost
Accumulate direct labor
costs by means of a
work record, such as a time ticket, for each
employee.
The Job Cost SheetRoseCo Job Cost Sheet
Job Number A - 143 Date Initiated 3-4-X9Date Completed 3-5-X9
Department B3 Units Completed 2Item Wooden cargo crate
Direct Materials Direct Labor Manufacturing OverheadReq. No. Amount Ticket Hours Amount Hours Rate AmountX7-6890 116$ 36 8 88$ 8 4$ 32$
Cost Summary Units ShippedDirect Materials 116$ Date Number BalanceDirect Labor 88$ Manufacturing Overhead 32$ Total Cost 236$ Unit Cost 118$
Apply manufacturing overhead to jobs using a predetermined overhead rate (POHR) based on
direct labor hours (DLH).