【正文】 s are assigned to each job or each batch of goods – An example of a job would be the manufacture of a mainframe puter – An example of a batch would be the printing of 225 wedding invitations ? The objective is to calculate the cost per job PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 4 Job order cost system continued ? Example of two different jobs PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 5 Process cost system ? A process cost system is used when a series of connected manufacturing processes or departments produce a large volume of similar products ? Process costing accounts for and accumulates productrelated costs for a period of time PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 6 Process cost system continued ? Example of a process cost system PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 7 JOB ORDER COST FLOW ? Job cost flows reflect the physical flow of materials ? Costs are first accumulated in: – Raw Materials Inventory – Factory Labour – Manufacturing Overhead Control ? All manufacturing costs are then assigned to Work in Process Inventory account PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 8 LO2 JOB ORDER COST FLOW continued ? When the job is finished, costs are transferred to Finished Goods Inventory account ? When the goods are sold, costs are transferred to Cost of Sales account ? Flow of costs has two steps: 1. Accumulating manufacturing costs incurred 2. Assigning the accumulated costs PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 9 Job order cost accounting PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 10 Accumulating manufacturing costs ? In a job order cost system, manufacturing costs are recorded in the period in which they are incurred Example ? Consider the July transactions for Wallace Manufacturing Pty Ltd which makes machine tools and dies PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 11 Accumulating manufacturing costs continued Raw materials costs ? At the time of purchase, no effort is made to associate the cost of materials with specific jobs or orders – On 4 July, Wallace purchases 2020 handles at $5 per unit and 800 modules at $40 per unit PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 12 July 4 Raw Materials Inventory 42 000 Accounts Payable 42 000 (Purchase of raw materials on account) Accumulating manufacturing costs continued Factory labour costs ? In a manufacturing pany, the cost of factory labour consists of –gross earnings of factory workers –employer payroll taxes on earnings –fringe benefits incurred by employer PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 13 Accumulating manufacturing costs continued – Wallace incurs $32 000 of factory labour costs ($27 000 relates to wages payable and $5000 relates to payroll taxes payable in July) PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 14 July 31 Factory Labour 32 000 Factory Wages Payable 27 000 Employer Payroll Taxes Payable 5 000 (To record factory labour costs) Accumulating manufacturing costs continued Manufacturing overhead costs ? Overhead costs may be recognised daily . machinery repairs, indirect materials, indirect labour ? Overhead costs may also be recorded periodically through adjusting entries . property taxes, depreciation, insurance PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 15 Accumulating manufacturing costs continued – A summary entry for manufacturing overhead for July for Wallace is: PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 16 July 31 Manufacturing Overhead 13 800 Utilities Payable 4 800 Prepaid Insurance 2 000 Accounts Payable (for repairs) 2 600 Accumulated Depreciation 2 000 Property Taxes Payable 1 400 (To record overhead costs) Assigning manufacturing costs to work in process ? A job cost sheet is a form used to record the costs chargeable to a specific job and to determine the total and unit cost of the pleted job ? Postings to job cost sheets are made daily ? Job cost sheets act as subsidiary ledgers PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 17 LO3 Assigning manufacturing costs to work in process continued Raw materials costs ? Raw materials costs are assigned when the materials are issued by the storeroom ? Written authorisation is made on a prenumbered materials requisition slip showing – Quantity