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4. Job Costing

4. Job Costing. Hanif Kanjer Dean, Rustomjee Business School. Index. Overheads are to be allocated Cost-allocation base Actual Costing Normal Costing (computed using Budgeted overhead rate) Under-allocation, Over-allocation.

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4. Job Costing

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  1. 4. Job Costing Hanif Kanjer Dean, Rustomjee Business School

  2. Index • Overheads are to be allocated • Cost-allocation base • Actual Costing • Normal Costing (computed using Budgeted overhead rate) • Under-allocation, Over-allocation

  3. Actual Costing, Normal Costing, accounting for manufacturing overhead E.g. 4-17, Pg 151 Cost Allocation base : Direct Manufacturing Labor Costs Manufacturing Overhead costs = Mfg OH rate* direct mfg labor costs

  4. Job Costing, Normal Costing, actual Costing E.g. 4-18, Pg 151 1 2

  5. Job Costing, Normal Costing, actual Costing E.g. 4-18, Pg 151 Manufacturing costs of a job are available much earlier under a normal-costing system. So, managers can evaluate the profitability of different jobs, the efficiency with which the jobs are done, and the pricing of the jobs are soon as the jobs are completed, while the experience is still fresh in everyone’s mind. Another advantage of normal costing is that corrective actions can be implemented much sooner. At the end of the year, though, the costs allocated using normal costing will not, in general, equal the actual costs incurred. 3

  6. E.g. 4-31, Pg 157 Job Costing, accounting for Mfg Overhead, budgeted rates (E*I) (E*G)

  7. E.g. 4-31, Pg 157 Job Costing, accounting for Mfg Overhead, budgeted rates

  8. Job Costing, accounting for Mfg Overhead, budgeted rates E.g. 4-31, Pg 157

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