ch 4 job costing Flashcards
LO
1 describe the building-block concepts of costing systems
2 distinguish job costing from process costing
3 describe the approaches to evaluating and implementing job-costing systems
4 distinguish between actual, budgeted, and normal costing
5 analyze the flow of costs from direct and indirect cost pools to inventory accounts, including adjustments for over- and under-allocated costs
job-costing system
the cost object is a unit or multiple units of a distinct product or service called a job
process-costing system
the cost object is masses of identical or similar units of a product or service
steps of job costing implementation
1 identify the problems and uncertainties
2 obtain info
3 make predictions about the future
4 make decisions by choosing among alternatives
5 implement the decision, evaluate performance, and learn
budgeted indirect cost rate =
budgeted annual costs / budgeted annual quantity of the cost-allocation base
steps to assign costs to an individual job
1 identify the job that is the chosen cost object
2 identify the direct costs of the job
3 select the cost-allocation bases to use for allocating indirect costs to the job
4 identify the indirect costs associated with each cost-allocation base
5 compute the rate per unit of each cost-allocation base used to allocate indirect costs to the job
6 compute the indirect costs allocated to the job
7 compute the total cost of the job by adding all direct and indirect costs assigned to the job
adjusted allocation rate approach
restates all overhead entries in the general ledger and subsidiary ledgers using actual cost rates rather than budgeted cost rates
proration approach
spreads underallocated overhead or over allocated overhead among ending WIP inventory, FG inventory and COGS
write-off approach
total under or over allocated overhead is included in this year’s COGS
