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Job Costing

Job Costing. Flowchart Narratives (Page 5) Sabrina Cheng Saw Sornvai Andrew Chu Matthew Cudmore. I ntroduction.

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Job Costing

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  1. Job Costing Flowchart Narratives (Page 5) Sabrina Cheng Saw Sornvai Andrew Chu Matthew Cudmore

  2. Introduction • Job Costing: Job Costing is the process of tracking the expenses incurred on a job against the budget or estimate for that job. Both direct and indirect costs are assigned to each open job. Direct costs include the material actually installed, rental equipment used on the job and wages paid for work performed on the site, etc. The advantages of tracking such data is that it allows companies to build up a profile of projects undertaken, and improve their estimation of work involved when similar projects are taken on.

  3. 2 1 3 1) An employee receives both Time Cards and Materials Requisitions and enters them into the Production labor transaction file and Material issuance transaction file, respectively. These costs include both direct and indirect aspects. 2) The Production labor transaction file sends its cost information to the payroll department to be used for other processes. 3) The cost information from both files are merged together and used to update another master file (next slide).

  4. 1 2 3 1) The merged cost information is sent to the production cost transaction file. These are the actual cost incurred for the job. 2) The cost information from the production file is printed into materials and labor usage reports and scrap and lost time reports. 3) The cost information from the file is also used to distribute costs between three other master files (next slide).

  5. 1 2 3 1) The cost information from the previous slide is distributed between the Manufacturing Overhead which includes manufacturing and indirect costs, Direct Material, and Direct Labor files. 2) This updated information is used to apply overhead to the individual jobs in the WIP Job file . 3) The WIP job file is displayed as a job status query and also printed into a job status report.

  6. 1 2 1) Cost information from the Production cost transaction file and the Standard cost file are compared to perform a standard cost variance analysis and put into standard cost variance reports. 2) Cost information from the Manufacturing Overhead file and the Standard cost file are compared to perform an overhead analysis and put into an overhead residual analysis report.

  7. Possible Controls • Implement a completeness check system in the software. This check will help to ensure that information is entered in full. • Back up master files at different secure location or on disk. • Perform a hash control total batch edit check when merging files to help ensure all the relevant data are transferred. This implies adding all the data into a sum, then verifying that sum is transferred to the new file. • Routinely perform a referential integrity edit check to ensure the relationships between the production cost transaction file and the three manufacturing files are correct and the costs are being distributed to their correct files. • Password protect access to all master files, enabling only certain people to view/edit them.

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