Summary
Summary Overview Job order costing, ABC & Process Costing
- Course
- Institution
Chapter 4,5,17 overview
[Show more]
Seller
Followjacquelinemv
Reviews received
Content preview
JOB ORDER COSTING ACTIVITY BASED COSTING PROCESS COSTING• involves the accumulation of the costs • precisely allocating overhead to those • Process costing: accurate analysis of
of materials, labor, and overhead for a items that actually use it; the system production process for identical
specific job can be used for the targeted products
• tracing specific costs to individual jobs reduction of overhead costs. • Each product has similar amount of:
• is used to accumulate costs at a small- • ABC works best in complex DM, DL, MOH
unit level environments, where there are many • direct materials are added at the
• job costing is appropriate for deriving machines and products beginning; conversion costa are
the cost of constructing a custom • ABC's 7 steps added equally along the process;
machine, designing a software • Step 1: identify the products that are • Five-step process-costing allocation
program, constructing a building, or the chosen cost objects • Summarize the flow of physical units
manufacturing a small batch of • Step 2: identify the direct costs of the of output
products. products. • Compute output in terms of
• following accounting activities: • Step 3: select the activites and cost- equivalent units
Materials. It accumulates the cost of allocation bases to use for allocating • Summarize total costs to account for
components and then assigns these indriect costs to the product. • Compute cost per equivalent unit
costs to a product or project once the • Step 4: Identify the indirect costs • Assign total costs to units completed
components are used. associated with each cost-allocation and to units in ending Work-in-
Labor. Employees charge their time to base (activity) Process
specific jobs, which are then assigned • Step 5: compute the rate per unit of
to the jobs based on the labor cost of each cost-allocation base (activity)
the employees. • Equivalent units: a metric that
used to allocate indirect costs to the
converts partially finished units into
Overhead. It accumulates overhead products.
completely finished units (unit in
costs in cost pools, and then allocates • Step 6: Compute the indirect costs process 60% its is equivalent to 0.6
these costs to jobs. allocated to the producs. complete unit)
• overhead cost pool • Step 7: compute the total costs of the
products by adding all direct and
indirect costs assigned to the product.
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 jacquelinemv. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.21. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
52510 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now