Summary
Summary FBS222 - Chapter 5 - Job-Order Costing
- Course
- Institution
- Book
Comprehensive summary of job-order costing (chapter 5), adapted from the book, Cornerstones of Managerial account. ISBN: 3542
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
FBS222 - Chapter 2 - Basic Managerial Accounting Concepts
-
FBS222 - Chapter 1 - Introduction to Managerial Accounting
Seller
Follow
kaylahumphries
Reviews received
Content preview
FBS 222 CHAPTER 5Job-Order Costing
CHARACTERISTICS OF THE JOB-ORDER
ENVIRONMENT
• Manufacturing and service firms producing unique (distinct from each other)
products or services require a job-order accounting system.
• While companies producing similar products or services can use a process-
costing accounting system.
JOB-ORDER PRODUCTION & COSTING
• A job is one distinct unit or set of units.
• Common job-order processes include:
o Printing
o Construction
o Furniture making
o Medical and dental services
o Motor repairs
o Beautician services
• The key feature of job-order costing is that the cost of one job differs from
that of another and must be kept track of separately.
• For job-order production systems, costs are accumulated by job (This assigning
cost is called a job-order costing system).
𝑇𝑜𝑡𝑎𝑙 𝑗𝑜𝑏 𝑐𝑜𝑠𝑡𝑠
Unit costs = 𝑂𝑢𝑡𝑝𝑢𝑡
PROCESS PRODUCTION & COSTING
• Firms in process industries mass-produce large quantities of similar or
homogenous products.
• Examples of process manufacturers include:
o Food canning
o Cement
o Petroleum
KAYLA HUMPHRIES
, FBS 222 CHAPTER 5
• The cost of one unit of a product is identical to the cost of another.
(Service firms can also use a process- costing approach).
• Process firms accumulate production costs by process or by department for a
given period.
• The output for the process for that period of time is measured.
𝑃𝑟𝑜𝑐𝑒𝑠𝑠 𝑐𝑜𝑠𝑡𝑠
Unit costs =
𝑂𝑢𝑡𝑝𝑢𝑡
This approach of cost accumulation is known as a process-costing system.
PRODUCTION COSTS IN JOB-ORDER COSTING
• The traditional definition to product-costing is that production costs consist
of direct materials, direct labour and overhead.
NORMAL COSTING & OVERHEAD
APPLICATION
• Unit costs are very important because managers need accurate cost
information on materials, labour and overhead when making decisions. (This
cost should be generated timely)
Job-Order Costing Process Costing
Wide variety of distinct products Homogeneous products
Costs accumulated by job Costs accumulated by process or
department
Unit cost = Total job costs/output Unit cost = Process costs/output
ACTUAL COSTING VS NORMAL COSTING
• Two ways are commonly used to measure the costs associated with
production: actual costing and normal costing.
ACTUAL COSTING
KAYLA HUMPHRIES
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller kaylahumphries. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
77254 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now