Académique Documents
Professionnel Documents
Culture Documents
Chapter 3
Product Costing and Cost
Accumulation in a Batch
Production Environment
McGraw-Hill/Irwin
Learning
Objective
1
McGraw-Hill/Irwin
3-2
Financial
Accounting
Product costs are
used to value
inventory and to
compute cost of
goods sold.
Managerial
Accounting and
Cost Management
Product costs are
used for planning,
control, directing, and
management decision
making.
3-3
Learning
Objective
2
McGraw-Hill/Irwin
3-3
Work-in-Process Inventory
Direct material cost
Direct labor cost
Manufacturing overhead
Income Summary
Expense closed into
Income Summary at end
of accounting period
3-5
Learning
Objective
3
McGraw-Hill/Irwin
3-4
Job-Order
Costing
one
Batch-production operations
Multiple products in batches of relatively small
quantity.
3-7
Job-Order
Costing
3-5
Job-Order
Costing
3-9
Quick Check
Which of the following companies would be
likely to use job-order costing rather than
process costing?
3-6
Quick Check
Which of the following companies would be
likely to use job-order costing rather than
process costing?
Accumulating Costs in a
Job--Order Costing System
Job
The primary document
for tracking the costs
associated with a
given job is the jobcost record.
3-12
3-7
JOB-COST RECORD
Description 80 deluxe alum. fishing boats
Date Completed
Nov. 22, 20x1
Number of Units Completed
80
Date
Direct Material
Requisition Number
Quantity
Unit Price
Cost
Date
Requisition Number
Direct Labor
Quantity
Unit Price
Cost
Date
Manufacturing Overhead
Requisition Number
Quantity
Unit Price
Cost
Cost Summary
Cost Item
Amount
Date
Shipping Summary
Units Remaining
Units Shipped
in Inventory
Cost Balance
3-13
JOB-COST RECORD
Description 80 deluxe alum. fishing boats
Date Completed
Nov. 22, 20x1
Number of Units Completed
80
Date
Direct Material
Requisition Number
Quantity
Unit Price
Cost
Date
Requisition Number
Direct Labor
Quantity
Unit Price
Cost
A materials requisition
Unit Price
form
isCostused to
Cost Summary authorize the use of
Cost Item
Amount
Total direct material
materials
on a job.
Total direct labor
Date
Manufacturing Overhead
Requisition Number
Quantity
Date
Shipping Summary
Units Remaining
Units Shipped
in Inventory
3-14
3-8
Quantity
7,200 sq ft
Date 11/1/x1
Dept. Painting
Unit Cost
2.50
Amount
18,000.00
Timothy Williams
Authorized
Signature
3-15
Date
11/1/x1
JOB-COST RECORD
Description 80 deluxe alum. fishing boats
Date Completed
Nov. 22, 20x1
Number of Units Completed
80
Direct Material
Requisition Number
Quantity
352
7,200 sq ft
Direct Labor
Quantity
Date
Requisition Number
Date
Manufacturing Overhead
Requisition Number
Quantity
Cost Summary
Cost Item
Total direct material
Total direct labor
Total manufacturing overhead
Total cost
Unit cost
Date
Unit Price
$2.50
Cost
$18,000
Unit Price
Cost
Unit Price
Cost
Amount
$18,000
Shipping Summary
Units Remaining
Units Shipped
in Inventory
Cost Balance
3-16
3-9
JOB-COST RECORD
Description 80 deluxe alum. fishing boats
Date Completed
Nov. 22, 20x1
Number of Units Completed
80
Date
11/1
Direct Material
Requisition Number
Quantity
803
7,200 sq ft
Unit Price
$2.50
Cost
$18,000
Date
Direct Labor
Requisition Number
Quantity
Unit Price
Cost
Date
Manufacturing Overhead
Requisition Number
Quantity
Unit Price
Cost
Cost Summary
Cost Item
Total direct material
Total direct labor
Total manufacturing overhead
Total cost
Unit cost
Date
Amount
$18,000
Shipping Summary
Units Remaining
Units Shipped
in Inventory
Accumulate
direct labor
costs by
means of a
work record,
such as a time
ticket, for each
employee.
Lets see one
Cost Balance
3-17
Time Started
8:00
11:30
1:00
Date 11/5/20x1
Department
Painting
Station
Time Stopped
11:30
12:00
5:00
Job Number
F16
Shop cleanup
A26
3-18
3-10
Date
11/1
Date
Various
dates
Date
Direct Material
Requisition Number
Quantity
803
7,200 sq ft
Direct Labor
Quantity
Time Cards
Various time cards
Unit Price
$2.50
Cost
$18,000
Unit Price
Cost
$20
$12,000
Unit Price
Cost
600
Manufacturing Overhead
Requisition Number
Quantity
Cost Summary
Cost Item
Amount
$18,000
12,000
Date
Shipping Summary
Units Remaining
Units Shipped
in Inventory
Cost Balance
3-19
Date
11/1
Date
Various
dates
Date
JOB-COST RECORD
Description 80 deluxe alum. fishing boats
Date Completed
Nov. 22, 20x1
Number of Units Completed
80
Direct Material
Requisition Number
Quantity
803
7,200 sq ft
Requisition Number
Direct Labor
Quantity
600
Manufacturing Overhead
Requisition Number
Quantity
Cost Summary
Cost Item
Total direct material
Total direct labor
Total manufacturing overhead
Total cost
Unit cost
Unit Price
$2.50
Cost
$18,000
Unit Price
Cost
$20
$12,000
Unit Price
Cost
Amount
$18,000
12,000
Units Shipped
in Inventory
Cost Balance
3-20
3-11
Date
11/1
Date
Various
dates
Date
11/30
Direct Material
Requisition Number
Quantity
803
7,200 sq ft
Requisition Number
Direct Labor
Quantity
Cost
$18,000
Unit Price
Cost
$20
$12,000
Unit Price
$30.00
Cost
$18,000
600
Manufacturing Overhead
Requisition Number
Quantity
Direct Labor Hours
600
Cost Summary
Cost Item
Date
Unit Price
$2.50
Amount
$18,000
12,000
18,000
Shipping Summary
Units Remaining
Units Shipped
in Inventory
Cost Balance
3-21
Date
11/1
Date
Various
dates
Date
11/30
JOB-COST RECORD
Description 80 deluxe alum. fishing boats
Date Completed
Nov. 22, 20x1
Number of Units Completed
80
Direct Material
Requisition Number
Quantity
803
7,200 sq ft
Requisition Number
Direct Labor
Quantity
Cost Summary
Cost Item
Total direct material
Total direct labor
Total manufacturing overhead
Total cost
Unit cost
Date
11/30
600
Manufacturing Overhead
Requisition Number
Quantity
Direct Labor Hours
600
Unit Price
$2.50
Cost
$18,000
Unit Price
Cost
$20
$12,000
Unit Price
$30.00
Cost
$18,000
Amount
$18,000
12,000
18,000
$48,000
$600
Shipping Summary
Units Remaining
Units Shipped
in Inventory
60
20
Cost Balance
$12,000
3-22
3-12
Date
11/1
Date
Various
dates
Date
11/30
JOB-COST RECORD
Description 80 deluxe alum. fishing boats
Date Completed
Nov. 22, 20x1
Number of Units Completed
80
Direct Material
Requisition Number
Quantity
803
7,200 sq ft
Requisition Number
Direct Labor
Quantity
Manufacturing Overhead
Requisition Number
Quantity
Direct Labor Hours
600
Cost Summary
Cost Item
Date
11/30
600
Unit Price
$2.50
Cost
$18,000
Unit Price
Cost
$20
$12,000
Unit Price
$30.00
Cost
$18,000
Amount
$18,000
12,000
18,000
$48,000
$600
Shipping Summary
Units Remaining
Units Shipped
in Inventory
60
20
Cost Balance
$12,000
3-23
Learning
Objective
4
McGraw-Hill/Irwin
3-13
POHR =
3-14
Learning
Objective
5
McGraw-Hill/Irwin
Job-Order Costing
Document Flow Summary
Lets summarize
the document
flow we have
been discussing
in a job-order
costing system.
3-30
3-15
Job-Order Costing
JobDocument Flow Summary
Production
Order for Job
Material
Requisition
Labor Time Records
X
Predetermined Overhead Rate
3-31
3-16
Work in Process
(Job-Cost Record)
Direct
Material
Mfg. Overhead
Indirect
Material
3-33
3-17
Work in Process
(Job-Cost Record)
Direct
Material
Direct
Labor
Mfg. Overhead
Indirect
Material
Indirect
Labor
3-35
Mfg. Overhead
Indirect Overhead
Material Applied to
Work in
Indirect
Process
Labor
Work in Process
(Job-Cost Record)
Direct
Material
Direct
Labor
Overhea
d
Applied
If actual and applied
manufacturing overhead are
not equal, a year-end
adjustment is required. We
will look at the procedure to
accomplish this later.
3-36
3-18
Now lets
complete the
goods and sell
them. Still with
me?
3-37
Cost of
Goods
Mfd.
Finished Goods
Cost of
Goods
Mfd.
Cost of
Goods
Sold
3-19
Lets return to
AFB Company
and see what we
will do if actual
and applied
overhead are not
equal.
3-39
3-40
3-20
$50,000 may be
closed directly to
cost of goods sold.
OR
Work in
Process
Finished
Goods
Cost of
Goods Sold
Cost of
Goods Sold
AFB Companys
Method
3-41
Actual Overhead
overhead Applied
costs
to jobs
Unadjusted
Balance
$50,000
Adjusted
Balance
AFBs
Mfg. Overhead
for the year
$5,050,000
$50,000
$5,100,000
$50,000
overapplied
3-42
3-21
Allocation
Alternative 2
Close to Cost
of Goods Sold
INCREASE
Work in Process
Finished Goods
Cost of Goods Sold
INCREASE
Cost of Goods Sold
DECREASE
Work in Process
Finished Goods
Cost of Goods Sold
DECREASE
Cost of Goods Sold
3-43
Learning
Objective
6
McGraw-Hill/Irwin
3-22
$xxx
xxx
$xxx
xxx
$xxx
Direct labor
Manufacturing overhead
Indirect material
Indirect labor
Other actual overhead charges
Total actual manufacturing overhead
Add: Overapplied overhead
or Deduct: Underapplied overhead
Overhead applied to work-in-process
Total manufacturing costs
Add: Work-in-process inventory, beginning
Subtotal
Deduct: Work-in-process inventory, ending
Cost of goods manufactured
xxx
$xxx
xxx
xxx
$xxx
xxx
xxx
$xxx
xxx
$xxx
xxx
$xxx
3-47
$xxx
xxx
$xxx
xxx
$xxx
xxx
$xxx
3-48
3-23
Learning
Objective
7
McGraw-Hill/Irwin
3-24
Indirect
Labor
Indirect
Materials
Other
Overhead
Department
1
Department
2
Department
3
3-51
Indirect
Labor
Indirect
Materials
Other
Overhead
Department
1
Department
2
Department
3
Direct
Labor
Hours
Machine
Hours
Raw
Materials
Cost
Products
Departmental Allocation Bases
3-52
3-25
End of Chapter 3
3-56