Job Order Costng
CHAPTER 4
Upon completon of his chaper, o! sho!ld be able o
"e#ne $ob order costng ssem and identf he pes of ind!sries ha
%o!ld be mos o !se his ssem& ssem& "emonsrae he mechanics of a $ob order costng ssem& "i'erentae "i'erentae among he forms !sed in he p!rchase and iss!ance of maerials
s!ch as a p!rchase re(!isiton, a p!rchase order, a recei)ing repor, and a
maerials re(!isiton "istng!ish be%een he periodic and perpe!al cos acc!m!laton ssems !sed o acco!n for maerials iss!ed o prod!cton and for ending maerials
in)enor& Prepare a $ob order cos shee
The $ob order cos proced!re *eeps he coss of )ario!s $obs or conracs separae separae d!ring heir man!fac!re or consr!cton& The mehod is i s applicable o $ob order %or* in facories, facories, %or*shop, and repair shops as %ell as o %or* b b!ilders, consr!cton engineers, shipb!ilders, and priners& The cos !ni is he $ob, he %or* order, or he conrac+ and he records %ill sho% he cos of each& The mehod pres!pposes he possibili of phsicall identfing he $obs prod!ced and and of charging each each %ih is o%n cos& cos& A )ariaton of he $ob order cos mehod is ha of costng orders b los& A lo is he (!ant of prod!c ha can be con)enienl and economicall be prod!ced and cosed& or e-ample, in he shoe man!fac!ring ind!sr, a conrac conrac is di)ided in o los, each lo being from .// o 01/ pairs of one si2e and sle of shoe& The coss are hen acc!m!laed for each lo& 3n $ob order costng, each $ob is an acco!ntng !ni o %hich maerials, labor, labor, and facor o)erhead coss are assigned b means of $ob order n!mbers& The cos of each order prod!ced for a gi)en c!somer or he cos of each lo o be placed in soc* is recorded on a s!mmar shee called $ob order cos shee, or merel a cos shee& This maer shee is designed o collec he coss of maerials , labor and facor o)erhead applicable o a speci#c $ob&
e)eral $obs or orders ma be going hro!gh a facor a he same tme, each cos shee is gi)en a $ob n!mber %hich is placed on each maerial re(!isiton and labor tme tc*e !sed 3 connecton %ih he $ob& These forms !sed for maerials and labor, n!mbered for he $ob o %hich he appl, are oalled dail or %ee*l and enered on he cos shees& The cos shee e)en!all becomes a s!mmar of all he coss, incl!ding facor o)erhead, in)ol)ed in completng a $ob& he cos shees are s!bsidiar records and are conrolled b he %or* in process acco!n& Jobs performed on he basis of c!somer speci#catons allo% he comp!aton of a pro# or loss on each order& 3f $obs const!e prod!cton of a speci#c (!ant for in)enor, $ob order costng permis comp!aton of a !ni cos for in)enor costng p!rposes&
5AJOR OURCE "OCU5E6T OR JO7 OR"ER COT368 .& JO79OR"ER COT HEET a& These records acc!m!lae prod!c coss of speci#c !nis or small baches of !nis for boh prod!c costng and conrol p!rposes& b& The #le of $ob9order shees for !ncompleed $obs ser)es as a perpe!al boo* in)enor and hr s!bsidiar ledger for :or* in Process Conrol& c& A separae cos shee is prepared for each $ob& 0& 5ATER3A; TOC
a& These records are he perpe!al boo* in)enor of coss and (!anttes of compleed goods held for sale& b& The #le of #nished goods soc* cards for !nsold goods is he s!bsidiar ledger of inished 8oods Conrol& 4& ACTOR> O?ERHEA" CO6TRO; COT RECOR" a& These records acc!m!lae deailed man!fac!ring o)erhead coss b deparmen& b& The #le of hese records for he acco!ntng period is he s!bsidiar ledger for acor O)erhead Conrol& 1& 5ATER3A; RE@U33T3O6, T35E T3C
5AJOR OURCE "OCU5E6T OR JO7 OR"ER COT368
.& JO79OR"ER COT HEET
a& These records acc!m!lae prod!c coss of speci#c !nis or small baches of !nis for boh prod!c costng and conrol p!rposes&
b& The #le of $ob9order shees for !ncompleed $obs ser)es as a perpe!al boo* in)enor and hr s!bsidiar ledger for :or* in Process Conrol& c& A separae cos shee is prepared for each $ob&
Job cos shee is a doc!men !sed o record man!fac!ring coss and is prepared b companies ha !se $ob9order costng ssem o comp!e and allocae coss o prod!cs and ser)ices& The informaton abo! man!fac!ring coss ha is sho%n on $ob cos shee !s!all incl!des maerials re(!isiton n!mber, cos of direc maerials iss!ed, tme tc*es, direc labor ho!rs, direc labor rae per ho!r and oal cos, man!fac!ring o)erhead rae per direc labor or machine ho!r and oal cos ec&
EA5P;EB 0& 5ATER3A; TOC
a& These records are he perpe!al boo* in)enor of coss and (!anttes of maerials on hand& b& The #le of maerials soc* cards for !n!sed maerials is he s!bsidiar ledger for 5aerials Conrol& c& A separae soc* card is prepared for each pe of maerial on hand&
5aerials ;edger Card
A maerials ledger card is a repor !sed in a $ob order cos ssem o rac* and record he n!mber of !nis ha are p!rchased and iss!ed o he prod!cton line& 3n oher %ords, his is a #le ha *eeps rac* of ho% man !nis of ra% maerials are ordered from )endors, ho% man !nis are in sorage, and ho% man ha)e been ransferred o he prod!cton line&
EA5P;EB =& 363HE" 8OO" TOC
inished 8oods 3n)enor
inished goods in)enor is he hird gro!p of in)enor o%ned b a man!fac!rer and consis of prod!cs ha are read for sale& >o! can hin* of his li*e merchandise o%ned b a reailer& These goods are compleel #nished, made i hro!gh he prod!cton process, and read for cons!mers o b!&
EA5P;EB 4& ACTOR> O?ERHEA" CO6TRO; COT RECOR" a& These records acc!m!lae deailed man!fac!ring o)erhead coss b deparmen& b& The #le of hese records for he acco!ntng period is he s!bsidiar ledger for acor O)erhead Conrol&
O)er or !nder9applied man!fac!ring o)erhead
The o)er or !nder9applied man!fac!ring o)erhead is de#ned as he di'erence be%een man!fac!ring o)erhead cos applied o %or* in process and man!fac!ring o)erhead cos ac!all inc!rred d!ring a period&
1& 5ATER3A; RE@U33T3O6, T35E T3C
5aerials Re(!isiton
A maerials re(!isiton form is a so!rce doc!men ha he prod!cton deparmen !ses o re(!es maerials for man!fac!ring process& A pical maerials re(!isiton form has he $ob n!mber, dae of re(!es, maerial descripton, (!ant, and proper managemen signa!res& "epending on he si2e of he compan, re(!es forms are #lled o! %ee*l, dail, or e)en ho!rl&
Time Tic*e
A tme tc*e or tme card is he doc!men !sed o record he amo!n of ho!rs an emploee %or*ed d!ring a pa period& Time tc*es come in all di'eren shapes and si2es& Traditonal tme tc*es are phsical cards ha are samped %ih sartng and ending tmes of emploees %or* das& 3n modern paroll ssems, emploees can sign ino a comp!er ssem ha eners he emploees tme direcl ino he acco!ntng and paroll ssem& This eliminaes he d!al e nr of raditonal ssems %hile pro)iding same le)el inernal conrols&
Cloc* Card
A cloc* card, also called a tme card, is a so!rce doc!men ha records he n!mber of ho!rs each emploee %or*s d!ring a pa period& Cloc* cards are also !sed b man!fac!rers o rac* he labor coss of each prod!cton process& Prod!cton managers can !se cards, also called tme tc*es, o record he amo!n of labor ho!rs !sed in each sep of prod!cton& This ssem %ill lead o m!ch more acc!rae labor coss and cos of goods sold&
EA5P;EB ACCOU6T368 PROCE"URE OR 5ATER3A;
3n man!fac!ring enerprises, he common practce is o record all maerials and s!pplies in one conrol acco!n, 5aerials or ores& Proced!res ha a'ec he maerials acco!n in)ol)e heB .& P!rchase of maerials and s!pplies& 0& 3ss!ance of maerials and s!pplies& A& "irec 5aerials 7& 3ndirec 5aerials and !pplies
Recording he p!rchase of maerials The acco!n debied %hen maerials are p!rchased is 5aerials or ores Dinsead of P!rchases for Periodic and he acco!n credied is Acco!ns Paable or ?o!chers Paable& As maerials are p!rchased he amo!n is posed on he 5aerial conrol acco!n and a he same tme he p!rchased is also enered on an indi)id!al maerials ledger cardFsoc* card Da separae is !sed for each maerial iem sho%ing (!ant recei)ed, !ni cos, and oal amo!n&
The Enr o record he p!rchased of maerials isB 5aerials
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Acco!ns Paable
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An enr is made on he soc* card !nder he Recei)ed secton& The enr o record he re!rn of maerials o )endor isB Acco!ns Paable 5aerials
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An enr is made on he soc* card !nder he Recei)ed secton enclosed in parenhesis o indicae red!cton in (!ant& Recording he iss!ance of maerials :hen a $ob is sared, he maerials needed for $ob are iss!ed based on he maerials re(!isitons prepared b he emploees& A cop of he re(!isitons is gi)en o he sore*eeper, %hich %ill ser)e as he basis for maerials o be iss!ed& The $ob
order n!mber is sho%n on he maerials o be iss!ed& The $ob order n!mber is sho%n on he maerials re(!isiton ogeher %ih he speci#cs on pe and (!ant of maerials re(!isiton ogeher %ih speci#cs on pe and (!ant of maerials re(!ired b each $ob& The (!ant, !ni cos, and oal cos of each of he maerials are enered on he iss!ed secton of he soc* card&
The enr o record he iss!ance of direc maerial is :or* in process
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5aerials
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An enr is made on he soc* card !nder he 3ss!ed secton and also on he cos shee G 5aerials&
The enr o record he iss!ance of indirec maerials isB acor o)erhead conrol 5aerials
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An enr is made on he soc* card !nder he 3ss!ed secton and also on he o)erhead analsis shee&
ho%n belo% is an ill!sraton of a maerial soc* card E-ample of a maerial soc* card ho%n belo% is an ill!sraton of a maerial re(!isiton slip& E-ample of a maerial re(!isiton form
The maerial conrol acco!n ma be s!mmari2ed as follo%sB
The balance of he 5aerials acco!n represens he 5aerials in)enor a he end of he period !nder consideraton& The amo!n sho!ld be e(!al o he oal of he balances of all he maerial soc* cards&
ACCOU6T368 PROCE"URE OR ;A7OR The acco!ntng proced!res for labor ma be di)ided ino %o distnc phasesB .& Collecton of paroll daa, comp!aton of earnings, calc!laton of paroll a-es, and pamen of %ages& 0& "isrib!ton and allocaton of labor coss o $obs, deparmens, and oher cos classi#catons&
3n mos facories, cloc* cards or tme records are !sed o record he das or ho!rs %or*ed b each emploee& These cloc* cards or tme records are !sed as he basis in comp!tng he gross earnings of emploees %ho are paid ho!rl %ages& 3n additon o hese cloc* cards tme tc*es are prepared for each %or*er o deermine he tme spen for each $ob as basis in deermining he amo!n o be charged o direc labor cos and indirec labor cos& The tme tc*es for )ario!s $obs are sored, priced, and s!mmari2ed, and he tme tc*e ho!rs sho!ld be reconciled %ih he cloc* card ho!rs&
ho%n belo% is an ill!sraton of a $ob tme tc*e&
A reg!lar iner)als, !s!all dail or %ee*l, he labor tme and labor cos for each $ob are enered on he $ob order cos shees& or each paroll period G %ee*l, e)er %o %ee*s, or monhl G he s!mmar of emploees earnings and he liabili for pamen is $o!rnali2ed and posed o he general ledger&
The enr o record he disrib!ton of paroll is :or* in process acor O)erhead Conrol Paroll
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An enr is made on he cos shee !nder he labor secton
The enr o record he pamen of paroll is Accr!ed acor Paroll Cash
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The %or* in process acco!n is !sed o charge he $obs %ih he direc labor cos& acor o)erhead conrol is charged for he indirec labor cos inc!rred& The a%ihheld is comp!ed based on he able pro)ided b he 7!rea! of 3nernal Re)en!e& or he Premi!ms and Phil Healh Conrib!tons& The able is pro)ided b he ocial ec!ri sem&
The clearing acco!n for he oal %ages d!e o he facor personnel is he paroll acco!n s!mmari2ed as follo%sB
The acco!n !sed o acc!m!lae he liabili for paroll or facor o)erhead is he Accr!ed acor Paroll s!mmari2ed as follo%sB
Acco!ntng for acor O)erhead
There are %o acco!ns !sed G facor o)erhead conrol and facor o)erhead applied& acor o)erhead conrol is !sed o acc!m!lae ac!al o)erhead inc!rred, %hile facor o)erhead applied is !sed o acc!m!lae estmaed facor o)erhead applied o prod!cton& or facor o)erhead applied o prod!cton, a predeermine rae is !sed and his is comp!ed !sing an of he follo%ing as a baseB Unis of prod!cton "irec maerial coss "irec labor ho!rs "irec labor coss 5achine ho!rs
As iems in he facor o)erhead conrol acco!n are inc!rred, he facor o)erhead conrol acco!n is debied& The applied facor o)erhead enered on he $ob order cos shee for each $ob is he basis for he follo%ing enr&
:or* in process
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Applied facor o)erhead
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As enr is made on he cos shee G facor o)erhead secton
The conrolling acco!n for acc!m!latng he indirec charges inc!rred in prod!cton isB
5an!fac!ring o)erhead applied G acco!n !sed for acc!m!latng he oal o)erhead charged o prod!cton d!ring period&
O)erF!nder applied o)erhead G di'erence be%een he ac!al o)erhead inc!rred and he applied o)erhead&
The closing of he facor o)erhead conrol acco!n and he facor o)erhead applied ma be done a he end of he monh or a he end of he ear& 3f he closing is o be done monhl, he follo%ing are he enriesB End of he monhB acor o)erhead applied UnderFo)er applied o)erhead acor o)erhead conrol
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End of he earB Cos of goods sold
--
UnderFo)er G applied o)erhead
--
3f he closing is o be done earl, he enr %ill be a he end of he ear onl&
End of he earB
acor o)erhead applied
--
Cos of goods sold
--
acor o)erhead conrol
--
The )ariance is comp!ed as follo%sB Ac!al facor o)erhead
---
;essB applied facor o)erhead
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?ariance
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:or* in process G conrolling acco!n !sed o record he Io% of he elemens of he cos hro!gh he facor d!ring a gi)en period&
The $o!rnal enr o record he cos of he $obs compleed isB
inished goods
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:or* in process
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:hen he #nished goods are deli)ered o c!somers, he sales and he cos of goods sold are recorded as follo%sB
Acco!ns Recei)able
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ales
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Cos of goods sold
----
inished goods
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3f a $ob is deli)ered direcl o c!somer, he enries o record he completon of he $ob and he deli)er o he c!somer ma be merged ino one as follo%sB
Cos of goods sold :or* in Process
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inished goods G a conrolling acco!n !sed o record he Io% of he cos of goods compleed and ransferred o he #nished goods soreroom d!ring he period
Cos of goods sold G an acco!n !sed o acc!m!lae he cos of #nished goods disposed hro!gh sale of c!somers&
3ll!srat)e problemB The norhern Consolidaed Compan has he follo%ing balances as of Jan!ar ., 0/.4B
5aerials
P 4,//
:or* 3n process
4,K//
inished goods
K,///
Accr!ed facor paroll
0//
C!racha ;epien "e$an Palomero "!blan
7ACT="
