Job Order and Process Costing Job Order

Custom/built to order products House

Cost = direct labor + direct materials + overhead applied

Process Products priced the same

BUS 2102 textbooks Bushel of soybeans

Cost = total manufacturing cost/total units

Job Order and Process Costing Pricing

ER visit Bagels Aircraft carrier Dent car door Box of paper clips Charleston newspaper

Job Order and Process Costing Job Order

Overhead Cost Track actual overhead or, Guess (normal costing using estimated overhead)

Overhead rate = Estimated Overhead/Estimated Units Estimating Overhead Units: labor and machine

Applying Overhead Labor hours (lots of peons – lawyers) Machine hours (highly mechanized – paper clip factory) Hours x Overhead Rate = Overhead Applied

Under/Over Applied Less busy: ____ applied Overhead costs lower than expected: _____ applied Cost of Goods Sold is adjusted for over/under applied

overhead

Job Order and Process Costing

Process Costing Equivalent Units Weighted Average

Method (combines Beginning WIP and current period units/costs)

Costs = Beg WIP costs + Cost this Period

Total Units = Units Completed + Ending WIP Equivalent Units

Job Order and Process Costing

Total Costs / Total Units = Cost Per Unit

Amount to Finished Goods = Finished Units x Unit Cost

Ending WIP = Ending WIP equivalent units x unit cost

Example: Exercise 6-26: Page 246

Job Order and Process Costing Job Order

Job Cost Sheets Total for all jobs equals Work In Process