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Job Order and Process Costing

Job Order and Process Costing. Job Order Custom/built to order products House Cost = direct labor + direct materials + overhead applied Process Products priced the same BUS 2102 textbooks Bushel of soybeans Cost = total manufacturing cost/total units. Job Order and Process Costing.

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Job Order and Process Costing

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  1. Job Order and Process Costing • Job Order • Custom/built to order products • House • Cost = direct labor + direct materials + overhead applied • Process • Products priced the same • BUS 2102 textbooks • Bushel of soybeans • Cost = total manufacturing cost/total units

  2. Job Order and Process Costing • Pricing • ER visit • Bagels • Aircraft carrier • Dent car door • Box of paper clips • Charleston newspaper

  3. Job Order and Process Costing • Job Order • Overhead Cost • Track actual overhead or, • Guess (normal costing using estimated overhead) • Overhead rate = Estimated Overhead/Estimated Units • Estimating Overhead • Units: labor and machine • Applying Overhead • Labor hours (lots of peons – lawyers) • Machine hours (highly mechanized – paper clip factory) • Hours x Overhead Rate = Overhead Applied • Under/Over Applied • Less busy: ____ applied • Overhead costs lower than expected: _____ applied • Cost of Goods Sold is adjusted for over/under applied overhead

  4. Job Order and Process Costing • Process Costing • Equivalent Units Weighted Average Method (combines Beginning WIP and current period units/costs) • Costs = Beg WIP costs + Cost this Period • Total Units = Units Completed + • Ending WIP Equivalent Units

  5. Job Order and Process Costing • Total Costs / Total Units = Cost Per Unit • Amount to Finished Goods = Finished Units x Unit Cost • Ending WIP = Ending WIP equivalent units x unit cost • Example: Exercise 6-26: Page 246

  6. Job Order and Process Costing • Job Order • Job Cost Sheets • Total for all jobs equals Work In Process

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