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COSTING SYSTMES
- Building Blocks:
- Cost Object: the distinct type of
job
- Direct Cost Pools: traced seperately from indirect
cost
- Indirect Cost Pool: allocated to the cost object
- Cost Pool: grouping of individual indirect cost
items
- Cost Allocation Base: a systmatic way to link
an indirect cost/group of indirect cost to cost
objects (#of machine hrs, or labour hrs)
- Cost Object: the distinct type of
job
- Types of Costing Systmes
- Job Costing: assigns cost to distinct units of a product or service
- Process Costing: assign cost to masses of identical/similar units and compute unit costs on an average
basis
- Job Costing: assigns cost to distinct units of a product or service
- Evaluating and Implementing Job Costing Systmes
- 1. Identify the job-> the cost object
- 2. Identify the direct cost of the object
- 3. Select the cost-allocation base to use for allocating
the I.C to the cost object
- 4. Identify and add all the I.C into one I.C pool
- 5. Compute the I.C allocation rate
- 6. Compute the I.C assigned to the cost object
- 7. Compute the T.C of the distinct object by adding all DC/IC
assigned to the job
- 7. Compute the T.C of the distinct object by adding all DC/IC
assigned to the job
- 6. Compute the I.C assigned to the cost object
- 5. Compute the I.C allocation rate
- 4. Identify and add all the I.C into one I.C pool
- 3. Select the cost-allocation base to use for allocating
the I.C to the cost object
- 2. Identify the direct cost of the object
- 1. Identify the job-> the cost object
- Actual Budgeted and Normal costing chart
- Adjustments for over-and underallocated cost
- 1. adjust the allocation base
- 2. prorate on the basis of the total amount of the
allocated MOH cost in the ending blances of WIP, FG,
COGS account
- 2. prorate on the basis of the total amount of the
allocated MOH cost in the ending blances of WIP, FG,
COGS account
- 1. adjust the allocation base
- Definitions:
- Source document: the origninal record that supprots journal
entries in the accounting systmes
- Job cost Records/job cost sheet: records and accumulates
al the cost assigned to a specific job, strating when the
work begins
- Labour time sheet: contains info about the amount of
labour time used for a specific job in spicific dept;
source doucment for DML
- MOH allocted: the amount of MOH allocted to distint types of jobs based
on the budgeted rate multiplied by the actual qty of the allocation base
used
- Budgeted MOH: EST MOH/EST BASE
- Underallocated I.C: occur when the allocated amount of I.C
in an accounting period is less than the acutal amount
- Overallocated I.C: when the allocated amount of I.C in an accounting
period is greater than the acutual amount
- Overallocated I.C: when the allocated amount of I.C in an accounting
period is greater than the acutual amount
- Underallocated I.C: occur when the allocated amount of I.C
in an accounting period is less than the acutal amount
- Budgeted MOH: EST MOH/EST BASE
- MOH allocted: the amount of MOH allocted to distint types of jobs based
on the budgeted rate multiplied by the actual qty of the allocation base
used
- Labour time sheet: contains info about the amount of
labour time used for a specific job in spicific dept;
source doucment for DML
- Job cost Records/job cost sheet: records and accumulates
al the cost assigned to a specific job, strating when the
work begins
- Source document: the origninal record that supprots journal
entries in the accounting systmes
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