Lecture Accounting principles (8th edition) – Chapter 20: Job order costing

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Lecture Accounting principles (8th edition) – Chapter 20: Job order costing

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In this chapter, the learning objectives are: Explain process operations and the way they differ from job order operations, define and compute equivalent units and explain their use in process cost accounting, define and prepare a process cost summary and describe its purposes.

Chapter 20-1 CHAPTER  20 JOB ORDER COST ACCOUNTING Accounting Principles,  Eighth Edition Chapter 20-2 Study Objectives Study Objectives Explain the characteristics and purposes of cost accounting Describe the flow of costs in a job order cost accounting system Explain the nature and importance of a job cost sheet Indicate how the predetermined overhead rate is determined and used Chapter 20-3 Study Objectives Study Objectives Chapter 20-4 Prepare entries for jobs completed and sold Distinguish between under­ and over­ applied  manufacturing overhead Preview of Chapter Preview of Chapter Accurate product costing is critical to a company’s success For accurate bids on new jobs For determining potential  profitability of new jobs For identifying profitability of  completed jobs Chapter 20-5 Job Order Cost Accounting Job Order Cost Accounting Cost Cost Accounting Accounting Systems Systems Job Order Cost System Process Cost System Chapter 20-6 Job JobOrder Order Cost Cost Flow Flow Accumulating Manufacturing Costs Assigning Manufacturing Costs to Work in Process Assigning Costs to Finished Goods Assigning Costs to Cost of Goods Sold Summary Reporting ReportingJob Job Cost CostData Data Cost of goods manufactured schedule Income statement presentation Under-or overapplied manufacturing overhead Cost Accounting Systems Cost Accounting Systems Cost accounting involves: Measuring, Recording, and Recording,  Reporting of product costs Consists of the various manufacturing costs that are fully integrated  into the general ledger system An important feature is the use of a perpetual inventory system  to provide immediate, up­to­date information on  the cost of a product Chapter 20-7 LO 1: Explain the characteristics and purposes of cost accounting   Cost Accounting Systems Cost Accounting Systems There are two basic types of cost accounting systems Chapter 20-8 LO 1: Explain the characteristics and purposes of cost accounting   Job Order Cost System Job Order Cost System Costs are assigned to each job or batch A job may be for a specific order or inventory A key feature: Each job or batch has its own  distinguishing characteristics  The objective:  to compute the cost per job Measures costs for each job completed – not for set time periods Chapter 20-9 LO 1: Explain the characteristics and purposes of cost accounting Job Order Cost System Job Order Cost System Chapter 20-10 LO 1: Explain the characteristics and purposes of cost accounting Assigning Manufacturing Costs to Work In Process Assigning Manufacturing Costs to Work In Process Assigning  Manufacturing  Overhead The sum of the  manufacturing  overhead columns of the  job cost sheets should  equal the  manufacturing  overhead debited  (i.e.,  applied) to Work in  Process Inventory Chapter 20-44 LO 4  Indicate how the predetermined overhead rate is determined and used Assigning Manufacturing Costs to Work In Process Assigning Manufacturing Costs to Work In Process At the End of Each Month: The balance in the Work in Process Inventory should equal the sum of the costs  shown on the job cost sheets of unfinished jobs Chapter 20-45 LO 4  Indicate how the predetermined overhead rate is determined and used Assigning Manufacturing Overhead  Assigning Manufacturing Overhead  to Work in Process    to Work in Process    Review Question The formula for computing the predetermined manufacturing  overhead rate is estimated annual overhead costs divided by an  expected annual operating activity, expressed as: a Direct labor cost Direct labor cost b.  Direct labor hours c.  Machine hours d.  Any of the above.  Chapter 20-46 LO 4  Indicate how the predetermined overhead rate is determined and used Assigning Costs to Finished Goods Assigning Costs to Finished Goods When a job is  completed, the  costs are  summarized  and the job cost  sheet is  completed Chapter 20-47 LO 5  Prepare entries for jobs completed and sold Assigning Costs to Finished Goods Assigning Costs to Finished Goods The entry for Wallace Manufacturing to transfer its total cost to  Finished Goods Inventory is Units remain in Finished Goods Inventory until sold Chapter 20-48 LO 5  Prepare entries for jobs completed and sold Assigning Costs to Cost of Goods Sold Assigning Costs to Cost of Goods Sold Cost of goods sold is recognized when a sale occurs Example: On January 31 Wallace Manufacturing sells Job No. 101, costing $39,000, for $50,000.  Chapter 20-49 LO 5  Prepare entries for jobs completed and sold Summary of Job Order Cost Flows Summary of Job Order Cost Flows Chapter 20-50 LO 5  Prepare entries for jobs completed and sold Summary of Job Order Cost Flows Summary of Job Order Cost Flows Chapter 20-51 LO 5  Prepare entries for jobs completed and sold Reporting Job Cost Data Reporting Job Cost Data The cost of goods manufactured schedule now shows manufacturing overhead  applied rather than actual overhead costs Applied overhead is added to direct materials and direct labor to determine total  manufacturing costs Chapter 20-52 LO 5  Prepare entries for jobs completed and sold Entries to Report Job Cost Data    Entries to Report Job Cost Data    Review Question In M Company, Job No. 26 is completed at a cost of $4,500 and  later sold for $7,000 cash.  A correct entry is: Chapter 20-53 a Debit Finished Goods Inventory $7,000 and credit Work in Process  Inventory $7,000 Inventory $7,000 b.  Debit Cost of Goods Sold $7,000 and credit Finished Goods Inventory  $7,000 c.  Debit Finished Goods Inventory $4,500 and credit Work in Process  Inventory $4,500 d.  Debit Accounts Receivable $7,000 and credit Sales $7,000.  LO 5  Prepare entries for jobs completed and sold Under­ or Overapplied Manufacturing Overhead Under­ or Overapplied Manufacturing Overhead A debit balance in manufacturing overhead means that overhead is underapplied Overhead assigned to work in process is less than  overhead incurred A credit balance in manufacturing overhead means that overhead is overapplied Overhead assigned to work in process is greater than  overhead incurred Chapter 20-54 LO 6  Distinguish between under­ and overapplied manufacturing overhead Under­ or Overapplied Manufacturing Overhead Under­ or Overapplied Manufacturing Overhead Any year end balance in manufacturing overhead is eliminated by  adjusting cost of goods sold Underapplied overhead is debited to CGS Overapplied overhead is credited to CGS Example: Wallace Manufacturing Company has a $2,500 credit balance in Manufacturing Overhead at December 31.   The adjusting entry for the overapplied overhead is: Chapter 20-55 LO 6  Distinguish between under­ and overapplied manufacturing overhead Under­ or Overapplied Manufacturing Overhead Under­ or Overapplied Manufacturing Overhead Review Question Manufacturing overhead is underapplied if: a Actual overhead is less than applied Actual overhead is less than applied b.  Actual overhead is greater than applied.  c.  The predetermined rate equals the actual rate d.  Actual overhead equals applied overhead.  Chapter 20-56 LO 6  Distinguish between under­ and overapplied manufacturing overhead  Chapter Review – Brief Exercise 20­6 Chapter Review – Brief Exercise 20­6 Marquis Company estimates that annual manufacturing  overhead costs will be $600,000.  Estimated annual operating  activity bases are:   direct labor cost $500,000; direct labor hours  50,000; and machine hours 100,000   Compute the predetermined  overhead rate for each activity base Base Calculation DL Cost $600,000 ÷ $500,000 = 120% DL Hours $600,000 ÷ 50,000 = $12/DL hour MachineHrs $600,000ữ100,000=$6/Machhour Chapter 20-57 LO2Identifythe3broadfunctionsofmanagement Copyright Copyright Copyrightâ2008JohnWiley&Sons,Inc.Allrightsreserved.Reproductionor translationofthisworkbeyondthatpermittedinSection117ofthe1976United States Copyright Act without the express written permission of the copyright owner  is unlawful. Request for further information should be addressed to the Permissions  Department, John Wiley & Sons, Inc. The purchaser may make back­up copies for  his/her own use only and not for distribution or resale. The Publisher assumes no  responsibility for errors, omissions, or damages, caused by the use of these programs  or from the use of the information contained herein Chapter 20-58 ... LO 2  Describe the flow of costs in a? ?job? ?order? ?cost? ?accounting? ?system Job? ?Order? ?Cost Flows ­ Overview Job? ?Order? ?Cost Flows ­ Overview Chapter 20-15 LO 2  Describe the flow of costs in a? ?job? ?order? ?cost? ?accounting? ?system Job? ?Order? ?Cost System Job? ?Order? ?Cost System... For accurate bids on new jobs For determining potential  profitability of new jobs For identifying profitability of  completed jobs Chapter 20-5 Job? ?Order? ?Cost? ?Accounting Job? ?Order? ?Cost? ?Accounting Cost Cost Accounting. .. The objective:  to compute the cost per? ?job Measures costs for each? ?job? ?completed? ?–? ?not for set time periods Chapter 20-9 LO 1: Explain the characteristics and purposes of cost? ?accounting Job? ?Order? ?Cost System Job? ?Order? ?Cost System

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Mục lục

  • Slide 1

  • CHAPTER 20

  • Study Objectives

  • Slide 4

  • Preview of Chapter

  • Slide 6

  • Cost Accounting Systems

  • Slide 8

  • Job Order Cost System

  • Slide 10

  • Process Cost System

  • Process Cost System

  • Slide 13

  • Job Order Cost Flows

  • Job Order Cost Flows - Overview

  • Slide 16

  • Job Order Cost Flow

  • Accumulating Manufacturing Cost

  • Accumulating Manufacturing Cost

  • Slide 20

  • Slide 21

  • Slide 22

  • Slide 23

  • Slide 24

  • Slide 25

  • Accumulating Manufacturing Costs

  • Assigning Manufacturing Costs to Work In Process

  • Slide 28

  • Slide 29

  • Assigning Manufacturing Costs to Work In Process

  • Slide 31

  • Slide 32

  • Slide 33

  • Slide 34

  • Slide 35

  • Slide 36

  • Slide 37

  • Assigning Manufacturing Costs to Work in Process

  • Slide 39

  • Slide 40

  • Slide 41

  • Slide 42

  • Slide 43

  • Slide 44

  • Slide 45

  • Assigning Manufacturing Overhead to Work in Process

  • Assigning Costs to Finished Goods

  • Slide 48

  • Assigning Costs to Cost of Goods Sold

  • Summary of Job Order Cost Flows

  • Slide 51

  • Reporting Job Cost Data

  • Entries to Report Job Cost Data

  • Under- or Overapplied Manufacturing Overhead

  • Slide 55

  • Slide 56

  • Chapter Review – Brief Exercise 20-6

  • Copyright

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