1
Cost and Management Accounting (Com704)
Job Order Costing
Chapter# 5
Definition: The job order cost procedure keeps the costs of
various jobs or contracts separate during their manufacture or
construction.
This method is applicable to job order work in factories,
workshops, and repair shops, work by builders, construction
engineers, shipbuilders, and printers.
The cost unit is the job, the work order or the contract, and the
records will show the cost of each.
Job Order Cost Sheets:
In job order costing, each job is an
accounting unit to which materials, labor and FOH costs are
assigned by means of job order numbers. The cost of each order
produced for a given customer or the cost of each lot to be placed
in stock is recorded on a summary sheet called Job Order Cost
Sheet of Cost Sheet.
Cost Sheet for a Non-departmentalized Plant
Delta Manufacturing Co
Job Order No. 978
For: Evans Construction Company
Date Ordered: 10/03/2011
Product: #14 Maple Drain Boards
Date Started: 14/03/2011
Specification: 12 x 20 x 1 Cleared Finished
Quantity: 10
Dates Completed: 20/03/2011
Materials
Date
Date Wanted: 22/03/2011
Amount
$
Direct Labor
Date
Amount
$
Applied FOH@125% of
[Link]
Date
Amount
$
2
14/3/2011
19/3/2011
20/3/2011
420.00
78.00
62.00
Total
560.00
14/3/2011
17/3/2001
18/3/2011
19/3/2011
20/3/2011
78.00
56.00
56.00
24.00
30.00
20/3/2011
244.00
305.00
Materials
560.00
Selling Price
Direct Labor
244.00
Factory cost
Applied FOH
305.00
Marketing Exp
Total Factory Cost
305.00
$ 1,109.00
$1,850.00
$ 1,109.00
176.00
Admin Exp
125.00
Cost to make and sell
1,410.00
------------------------------------
$
Profit
$ 440.00
Cost Sheet for a Departmentalized Plant
Modern Furniture Company
Job Order No. 2706
For: Federal Department Store
Date Ordered: 22/09/2011
Product: #120-Recliners
Date Started: 21/11/2011
Specification: Attached drawings blueprints
Date Wanted: 10/12/2011
Quantity: 100
05/12/2011
Dates Completed:
Direct Materials
Date
Dept
Req #
Description
Quantity
Cost
unit
21/11/20
11
Cutting
2947
2948
100pieces
50 pieces
$ 10.80
7.00
$ 1080.00
350.00
Assembly
3080
Support lumber oak, 10
ft
Support lumber oak, 8
ft
500 no
3.00
1,500.00
Upholster
y
3407
Glue, pegs, and screws
1,000 yds
6.50
6,500.00
25/11/20
11
27/11/20
11
per
Total
Upholstery cloth
$
9,430.00
3
Total materials cost
Direct Labor
Date
Dept
Time Description
report
#
21/11/20
11
Cutting
867-901
Power saw cutting
20
$ 6.75
$ 135.00
Planning
11251130
Planning
50
7.50
375.00
Assembling frames
100
7.25
725.00
Padding
150
8.00
1,200.00
22/11/20
11
Assembly
Rate
Cost
13601397
23-2411/2011
2527/11/20
11
Hours
Upholster
y
14801505
Total labor cost
2435.00
Applied Factory overhead
Date
Dept
Basis
25/11/2011
25/11/2011
Cutting
Planning
per
27/11/2011
29/11/2011
Assembly
Upholstery
$
3
[Link]
$
4
[Link]
$
2
[Link]
100%
[Link]
per
Total
FOH
Hours
Rate
Cost
20
50
$ 3.00
4.00
$ 60.00
200.00
100
-
2.00
-
200.00
1200.00
per
1,660.00
of
App
Materials
$21,000.00
9,430.00
Selling Price
Direct Labor
13,525.00
2,435.00
Applied FOH
1,660.00
Total Factory Cost
$ 13,525.00
Factory cost
Marketing Exp
2,206.00
Admin Exp
1,905.00
Cost to make and sell
----------------------
17,636.00
Profit
-----------------------------
$3,364.00
Cost Accounting Procedure for Material
1) Recording the Purchase of Material
When materials are purchased
Material ----------------------- 25000
Accounts Payable ----------------------25000
Material returned to vendor
Accounts Payable ----------2000
Materials --------------------------------- 2000
2) Recording the issuance of Direct Material
Work in process--------------- 31000
Material --------------------------------- 31000
3) Recording the issuance of Indirect Material
FOH Control a/c-------------- 6000
Materials ------------------------------- 6000
WIP----------------------------- 6000
FOH Control a/c----------------------- 6000
Cost Accounting Procedure for Labor
Payroll------------------------- 17200
Tax Payable--------------------------- 2580
FICA Tax Payable--------------------- 1118
Accrued Payroll----------------------- 13502
Accrued Payroll ------------- 13502
Cash----------------------------------- 13502
Work in process------------ 17200
Payroll-------------------------------- 17200
Cost Accounting Procedure for FOH
Factory overhead is entered on the job order cost sheets on the
basis of a predetermined factory overhead rate based on direct
labor hours, direct labor cost, machine hours or other appropriate
base.
Work in process------------------------- 13200
Applied FOH
(600 [Link]@Rs. 2.20)
------------ 13200
Applied FOH ------------------------------ 13200
FOH Control a/c----------------------------------- 13200
Accounting Procedures for Jobs Completed and Products
Sold
Finished Goods----------------------- 62180
WIP-Material----------------------------------- 26000
WIP-Labor--------------------------------------- 24300
WIP-FOH---------------------------------------- 11880
Cost of Goods Sold----------------- 52300
Finished Goods------------------------------- 52300
Accounts Receivable-------------- 88000
Sales------------------------------------------- 88000
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