Planning And Management Control Systems (PDF)

PLANNING AND MANAGEMENT CONTROL SYSTEMS Maurizio Massaro Chapter 15 Job Order Costing and Analysis Chapter 15 Copyright ©2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. ...

PLANNING AND MANAGEMENT CONTROL SYSTEMS Maurizio Massaro Chapter 15 Job Order Costing and Analysis Chapter 15 Copyright ©2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.  11 - 3 Chapter 15 Learning Objectives CONCEPTUAL C1 Describe important features of job order production. C2 Explain job cost sheets and how they are used in job order costing. ANALYTICAL A1 Apply job order costing in pricing services. PROCEDURAL P1 Describe and record the flow of materials costs in job order costing. P2 Describe and record the flow of labor costs in job order costing. P3 Describe and record the flow of overhead costs in job order costing. P4 Determine adjustments for overapplied and underapplied factory overhead. © McGraw-Hill Education 3  Learning Objective C1: Describe important features of job order production. © McGraw-Hill Education 4  19 - 5 Cost Accounting Systems Process Job Costing Costing Chapter 16 ▪ Used for production of large, unique, or high-cost items. ▪ Built to order rather than mass produced. ▪ Many costs can be directly traced to each job. © McGraw-Hill Education 5 Learning Objective C1: Describe important features of job order production.  19 - 6 Job Order Production Exhibit 15.1 © McGraw-Hill Education 6 Learning Objective C1: Describe important features of job order production.  19 - 7 Production Activities in Job Order Costing Exhibit 15.2 © McGraw-Hill Education 7 Learning Objective C1: Describe important features of job order production.  Cost Flows Manufacturing costs flow: 1. Raw materials – direct and indirect materials 2. Work in process –job is being produced 3. Finished goods –completed goods 4. Cost of goods sold – goods which are sold Subsidiary records store information about the manufacturing costs for each individual job. © McGraw-Hill Education 8 Learning Objective C1: Describe important features of job order production.  Let’s see if you got it Job order costing would be appropriate for: A. Company that produces invidually designed products (T) B. A company that produces pencils 9  Learning Objective C2: Explain job cost sheets and how they are used in job order costing. © McGraw-Hill Education 10  19 - 11 Job Cost Sheet Exhibit 15.3 © McGraw-Hill Education 11 Learning Objective C2: Explain job cost sheets and how they are used in job order costing.  19 - 12 Let’s see if you got it Job order cost sheets: A. Display the total cost of a job (T) B. Only raw material costs C. Onlly raw material plus indirect labor costs 12  Learning Objective P1: Describe and record the flow of materials costs in job order costing. © McGraw-Hill Education 13  Materials and Labor Costs Materials received recorded in a receiving report Receiving report – materials source document Materials ledger cards –updated when materials are purchased and issued for use in production. Exhibit 15.4 © McGraw-Hill Education 14 Learning Objective P1: Describe and record the flow of materials costs in job order costing.  19 - 15 Exhibit Materials Ledger Card 15.5 © McGraw-Hill Education 15 Learning Objective P1: Describe and record the flow of materials costs in job order costing.  19 - 16 Materials Requisition Exhibit 15.6 © McGraw-Hill Education 16 Learning Objective P1: Describe and record the flow of materials costs in job order costing.  19 - 17 Materials Requisition (continued) © McGraw-Hill Education 17 Learning Objective P1: Describe and record the flow of materials costs in job order costing.  19 - 18 Let’s see if you got it In nearly all job order costs sytems, materials ledger cards are perpetual records that are updated each time materials are purchased or issued for use in production A. TRUE (T) B. FALSE 18  Learning Objective P2: Describe and record the flow of labor costs in job order costing. © McGraw-Hill Education 19  19 - 20 Labor Cost Flows Exhibit 15.8 © McGraw-Hill Education 20 Learning Objective P2: Describe and record the flow of labor costs in job order costing.  19 - 21 Labor Time Ticket Exhibit 15.9 © McGraw-Hill Education 21 Learning Objective P2: Describe and record the flow of labor costs in job order costing.  19 - 22 Labor Time Ticket (continued) © McGraw-Hill Education 22 Learning Objective P2: Describe and record the flow of labor costs in job order costing.  19 - 23 Let’s see if you got it What do you debit and credit when direct labor coss are recorded: A. Debit (work in progress inventory) B. Credit(Factory wages payable) 23  Learning Objective P3: Describe and record the flow of overhead costs in job order costing. © McGraw-Hill Education 24  19 - 25 Overhead Costs Exhibit 15.11 © McGraw-Hill Education 25 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 26 Set Predetermined Overhead Rate Road Warriors uses a predetermined overhead rate (POHR) based on direct labor cost to apply overhead to jobs. Exhibit 15.12 © McGraw-Hill Education 26 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 27 Predetermined Overhead Rate Exhibit 15.13 © McGraw-Hill Education 27 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 28 Record Actual Overhead Indirect Material Indirect Labor Other © McGraw-Hill Education 28 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 29 Record Indirect Materials Used © McGraw-Hill Education 29 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 30 Record Indirect Labor Used © McGraw-Hill Education 30 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 31 Record Other Overhead Costs © McGraw-Hill Education 31 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 32 Summary of Cost Flows Exhibit 15.15 © McGraw-Hill Education 32 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 33 Summary of Cost Flows (Pt. 2) Exhibit 15.16 © McGraw-Hill Education 33 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 34 Summary of Cost Flows (Pt. 3) Exhibit 15.17 © McGraw-Hill Education 34 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 35 Schedule of Cost of Goods Manufactured Exhibit 15.18 © McGraw-Hill Education 35 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 36 Let’s see if you got it The total cost of finished goods has a total of 9,000 (600 units). If the overhead applied to these goods is 3,000 and the overhead rate is 75% of direct labor, how much direct materials cost was incurred in producing these units? (Foruma= DM+DL+OH=Total costs): A. 3,750 B. 2,000 (T) -> DM+3000/0.75+3000 = 9,000 C. 4,000 D. 6,000 E. 9,000 36  Learning Objective P4: Determine adjustments for overapplied and underapplied factory overhead. © McGraw-Hill Education 37  19 - 38 Adjust Factory Overhead Exhibit 15.19 Exhibit 15.20 © McGraw-Hill Education 38 Learning Objective P3: Describe and record the flow of overhead costs in job order costing.  19 - 39 Adjust Underapplied or Overapplied Overhead © McGraw-Hill Education 39 Learning Objective P4: Determine adjustments for overapplied and underapplied factory overhead.  Learning Objective A1: Apply job order costing in pricing services. © McGraw-Hill Education 40  19 - 41 Job Order Costing of Services Job order costing applies to service companies. Differences for service firms: Service firms do not have raw materials or finished goods inventory. They have supplies, but these may be considered overhead. Direct labor is used to apply overhead. Typically use different account titles such as Services in Process Inventory and Services Overhead. Exhibit 15.21 © McGraw-Hill Education 41 Learning Objective P4: Determine adjustments for overapplied and underapplied factory overhead.  Pricing for Services Service providers also use job order costing. Cost for each individual job are track separately. Total costs include labor and overhead. © McGraw-Hill Education 42 Learning Objective A1: Apply job order costing in pricing services.  19 - 43 End of Chapter 15 © McGraw-Hill Education 43