Notes

Created @February 27, 2021 1:57 PM

Class ACYCST1

Type Class Lecture

https://www.studocu.com/ph/document/de-la-salle-
Materials university/accountancy/mandatory-assignments/ch02-cost-
accounting/8216223/view

Reviewed

Job Order: Whether or not the company will use actual or normal costing

Process Costing: More than 1 processes to finish the goods

Many products produced

Notes 1
 Examples of Process Costing

JOB ORDER COSTING - PERTAINS TO CLIENT ENGAGEMENT, CONTRACT, OR

Notes 2
 Custom orders

Per job

Examples of Job Order Costing

Notes 3
 Differences of Process and Job Order Costing

Assign and allocate the materials and labor to the jobs

Notes 4
 Direct Labor and Manufacturing Overhead - Conversion Cost

Notes 5
 Example of a Job Order Cost Sheet

Job Cost Sheet: Source document that provides virtually all information about a
specific job

Notes 6
 Example of Direct Materials Cost Sheet

Materials Requisition Form: Prepared so materials can be release to each job

Notes 7
 The computed Total Cost ($116) from slide above is then transferred to the Job
Order Cost Sheet

Notes 8
 Example of Direct Labor Cost Sheet

Time Sheet: Like an attendance sheet used to compute for the wage
Hours Completed x Hourly Rate = Amount

Notes 9
 Manufacturing Overhead: Normal to use Applied or Predetermined Overhead
Rate

The computed Amount ($88) from slide above is then transferred to the Job
Order Cost Sheet

Notes 10
 POHR - Predetermined Overhead Rate

Allowed to do an estimate (use predetermined rate) because you have to sell your
product right away in the market, thus the need to calculate for the Product Cost
since the Actual Cost can only be determined in the end of the period

Notes 11
 Formula of POHR

Cost Driver: Is dependent on where it is based

Notes 12
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Notes 14
 POHR x Activity (Hours) = Amount (Manufacturing Overhead)

Notes 15
 💡 Note: In the Job Order Cost Sheet, the Estimated Manufacturing
Overhead is applied and not the Actual

Direct Labor
+Direct Material

+Manufacturing Overhead

Total Cost
÷ Units Completed

Unit Product Cost

Notes 16
 Summary of Part 1

Started by comparing the cost accumulation systems

Notes 17
 Job Order - Accumulate cost based on a specified job or special order

Process Costing - Mass production which involves process and accumulation

Job Cost Sheet - Source documents that provides all information about a
particular job

Materials Requisition Form - Prepared so materials can be released into

Employees Time Sheet - Employees log in or account the work hours of the
employees the cost accounted will go to the Direct Labor

Actual Costing - Actual costs of DL, Dm, and MOH are applied to the product

Normal Costing - Actual DL and Dm and applied MOH

Summary of Job Order Cost Part 1

Notes 18
Notes 19
 Sales Order - Starting Point

Notes 20
 You will not start the production until there is an order from a client

Transporting the Materials - Starting Point

Notes 21
Notes 22
 Job Order Sheet Manufacturing Overhead Account

Direct Materials Indirect Materials

Direct Labor Indirect Labor

Recorded in an Inventory Account

Notes 23
 Direct Materials increase Work in Process and decrease Raw Materials
Indirect Materials charged to Manufacturing Overhead and decrease Raw
Materials

Take off (Credit) Raw Materials since they will be used for production already

Notes 24
 Direct Labor increases Work in Process
Indirect Labor increases Manufacturing Overhead
We Credit salaries and wages payable since the employees will be used in
production already

Notes 25
 Property Taxes or Property Taxes Payable
Prepaid Insurance or Prepaid Insurance Expired
Examples: Factory Utility, Factory Insurance, Factory Supplies, Factory Taxes
Expenses, Factory Licenses, Factory Depreciation
Debit Manufacturing Overhead (for Actual) instead of Expenses because they are
Inventoriable (Product Cost) or related

Notes 26
 Predetermined Overhead Rate
There is an actual and applied
Debit: Actual
Credit: Applied
Will result to over or underapplied

Notes 27
 After procurement
Take off Work in Process since job has been completed, thus can already be sold

Notes 28
 Goods Sold will be part of Expenses

If problem regarding over or underapplied is silent, it is assumed to be part of

Notes 29
 Normal Expenses since for non-manufacturing

Notes 30
 Example

Predetermined Overhead Rate of PearCo is php. 4.00

Notes 31
 Since the Actual Overhead is $650,000 and the Applied Overhead is $680,000,
there is an overapplied of $30,000

Notes 32
 For Job Order purposes, the method to be applied is the closing directly to Cost of
Goods Sold
Transferring the over or underapplied to the COGS is the normal allocation (if
problem is silent use this)

Notes 33
 Exercises

Notes 34
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