...CHAPTER 2 Job Order Costing YOUR LEARNING OBJECTIVES After completing this chapter, you should be able to: LO1 LO2 LO3 LO4 LO5 LO6 Describe the key differences between job order costing and process costing. Describe the source documents used to track direct materials and direct labor costs to the job cost sheet. Calculate a predetermined overhead rate and use it to apply manufacturing overhead cost to jobs. Describe how costs flow through the accounting system in job order costing. Calculate and dispose of overapplied or underapplied manufacturing overhead. Calculate the cost of goods manufactured and cost of goods sold. Lecture Presentation–LP2 www.mhhe.com/whitecotton1e 36 FOCUS COMPANY: Toll Brothers Inc. “America’s Luxury Home Builder” www.tollbrothers.com H ave you ever found yourself in the following situation? You go out to a trendy new restaurant with a group of friends. You are on a limited budget, so you order the cheapest dish on the menu and a glass of ice water. Meanwhile, your friends indulge in a full-course meal with drinks, appetizers, entrees, and dessert. When it is time to pay the bill, would you prefer to split the check or get a separate tab for each person at the table? This common scenario illustrates the basic difference between the two costing systems discussed in the next two chapters. Process costing is similar to splitting the check, or spreading the total cost over the number of units produced (or in the case of a restaurant...
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...CHAPTER 2 Job Order Costing YOUR LEARNING OBJECTIVES After completing this chapter, you should be able to: LO1 LO2 LO3 LO4 LO5 LO6 Describe the key differences between job order costing and process costing. Describe the source documents used to track direct materials and direct labor costs to the job cost sheet. Calculate a predetermined overhead rate and use it to apply manufacturing overhead cost to jobs. Describe how costs flow through the accounting system in job order costing. Calculate and dispose of overapplied or underapplied manufacturing overhead. Calculate the cost of goods manufactured and cost of goods sold. Lecture Presentation–LP2 www.mhhe.com/whitecotton1e 36 FOCUS COMPANY: Toll Brothers Inc. “America’s Luxury Home Builder” www.tollbrothers.com H ave you ever found yourself in the following situation? You go out to a trendy new restaurant with a group of friends. You are on a limited budget, so you order the cheapest dish on the menu and a glass of ice water. Meanwhile, your friends indulge in a full-course meal with drinks, appetizers, entrees, and dessert. When it is time to pay the bill, would you prefer to split the check or get a separate tab for each person at the table? This common scenario illustrates the basic difference between the two costing systems discussed in the next two chapters. Process costing is similar to splitting the check, or spreading the total cost over the number of units produced (or in the case of a restaurant...
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...CHAPTER 3 LEARNING OBJECTIVES After studying Chapter 3, you should be able to: Distinguish between process costing and job-order costing and identify companies that would use each costing method. 2. Identify the documents used in a job-order costing system. 3. Compute predetermined overhead rates and explain why estimated overhead costs (rather than actual overhead costs) are used in the costing process. 4. Record the journal entries that reflect the flow of costs in a job-order costing system. 5. Apply overhead cost to Work in Process using a predetermined overhead rate. 6. Prepare schedules of cost of goods manufactured and cost of goods sold. 7. Compute under- or overapplied overhead cost and prepare the journal entry to close the balance in Manufacturing Overhead to the appropriate accounts. 8. (Appendix 3A) Explain the implications of basing the predetermined overhead rate on activity at capacity rather than on estimated activity for the period. SYSTEMS DESIGN: JOB-ORDER COSTING OVERAPPLIED/UNDERAPPLIED Cris Griffiths Guitar Works of Saint Johns, Newfoundland, focuses on repair work and building custom guitars. Late one night while disassembling yet another guitar, Griffiths had a vision of a single bracing piece instead of the three-dozen separate internal reinforcements acoustic guitars typically have. “It was a simple idea that was easy to flesh out, but turning it from an idea into...
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... internal reports that don't follow GAAP financial and nonfinancial reports on departments Instructor Explanation: Chapter 1, page 4 Points Received: 6 of 6 Comments: 2. Question : (TCO A) Borders Books is an example of a Student Answer: manufacturing-sector company. merchandising-sector company. service-sector company. client-focused company. Instructor Explanation: Chapter 1, page 36 Points Received: 6 of 6 Comments: 3. Question : (TCO A) Which of the following issues is NOT addressed by the Sarbanes-Oxley legislation? Student Answer: Improving internal control Corporate governance Monitoring of managers Disclosure practices of private companies Instructor Explanation: Chapter 1, page 14 Points Received: 0 of 6 Comments: 4. Question : (TCO A) Within the relevant range for a car manufacturer, if there is a change in the level of cars produced, then Student Answer: fixed and variable costs per unit will change. fixed and variable costs per unit will remain the same. fixed costs per unit will remain the same and variable costs per unit will change. fixed costs per unit will change and variable costs per unit will remain the same. Instructor Explanation: Chapter 2, pages 32-34, variable costs will change with changes in production volume Points Received: 6 of 6 Comments: ...
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...Confirming Pages CHAPTER 2 Job Order Costing YOUR LEARNING OBJECTIVES After completing this chapter, you should be able to: LO1 LO2 LO3 LO4 LO5 LO6 Describe the key differences between job order costing and process costing. Describe the source documents used to track direct materials and direct labor costs to the job cost sheet. Calculate a predetermined overhead rate and use it to apply manufacturing overhead cost to jobs. Describe how costs flow through the accounting system in job order costing. Calculate and dispose of overapplied or underapplied manufacturing overhead. Calculate the cost of goods manufactured and cost of goods sold. Lecture Presentation–LP2 www.mhhe.com/whitecotton1e 36 whi10777_ch02_036-087.indd 36 9/17/09 2:29:08 PM Confirming Pages FOCUS COMPANY: Toll Brothers Inc. “America’s Luxury Home Builder” www.tollbrothers.com H ave you ever found yourself in the following situation? You go out to a trendy new restaurant with a group of friends. You are on a limited budget, so you order the cheapest dish on the menu and a glass of ice water. Meanwhile, your friends indulge in a full-course meal with drinks, appetizers, entrees, and dessert. When it is time to pay the bill, would you prefer to split the check or get a separate tab for each person at the table? This common scenario illustrates the basic difference between the two costing systems discussed in the next two chapters. Process costing is similar to...
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...------------------------------------------------- Supplements Project Manager: Andra Skaalrud ------------------------------------------------- Copyright © 2015 Pearson Education, Inc. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to 201-236-3290. | 10 9 8 7 6 5 4 3 2 1ISBN-13: 978-0-13-342877-3ISBN 10: 0-13-342877-X | TABLE OF CONTENTS Preface iv Dedication v...
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...Study Plan for FNC1 Financial Accounting Concepts and Procedures Chapters 1-‐4 and Chapter 10 1. Understand Basic Accounting Concepts and Principles 2. Know what items are shown on a Balance Sheet, Income Statement, and Statement of Owners Equity 3. Know the Accounting equation 4. Understand debits and credits 5. Understand the timing of recording transactions 6. Understand when revenue and expenses are recoginized 7. Know how to calculate depreciation expense 8. Know how to calculate accumulated depreciation Long Term Liabilities Chapter 14 1. Starting on Page 845 make sure you know the 4 types of Bonds and their characteristics. 2. Make sure you understand Bond issue prices, Bonds issued at Par Value, at a Discount, and at a Premium. 3. Understand how to record interest expense when bonds are issued at par value, a discount, and a premium. Stocks and Dividends Chapters 13 1. Make sure you understand dividends and dividend policies Statement of Cash Flows Chapter 16 1. 2. 3. 4. Know what a Statement of Cash Flows is Understand the Direct and Indirect Method for preparing a Statement of Cash Flows Know the Catergories shown on a Statement of Cash Flows. Study the exhibit on page 940 for the indirect method. Know what gets added in and...
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...To download more slides, ebooks, solution manual and test bank, visit http://downloadslide.blogspot.com Solutions Manual COST ACCOUNTING © 2012 Pearson Education, Inc. Publishing as Prentice Hall. SM Cost Accounting 14/e by Horngren © 2012 Pearson Education, Inc. Publishing as Prentice Hall. SM Cost Accounting 14/e by Horngren To download more slides, ebooks, solution manual and test bank, visit http://downloadslide.blogspot.com Solutions Manual COST ACCOUNTING Fourteenth Edition Charles T. Horngren Srikant M. Datar Madhav Rajan Upper Saddle River, NJ 07458 © 2012 Pearson Education, Inc. Publishing as Prentice Hall © 2012 Pearson Education, Inc. Publishing as Prentice Hall. SM Cost Accounting 14/e by Horngren This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Acquisition Editor: Stephanie Wall Editorial Project Manager: Christina Rumbaugh Editorial Assistant: Brian Reilly Project Manager, Production:...
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...20 PROFESSOR: SALVADOR CARMONA □ Ph.D (Accounting). Universidad de Sevilla. □ Last version, November 2006 COURSE DESCRIPTION A cost accounting system collects and classifies costs and assigns them to cost objects. The goal of a cost accounting system is to measure the cost of designing, developing, producing (or purchasing), selling, distributing, and servicing particular products or services. Cost allocation is at the heart of most accounting systems. Cost behavior -how the activities of an organization affect its costs- is also fundamental to cost accounting systems. The data provided by a cost accounting system is used for various purposes, which include product costing, planning and control, and decision making. This course mainly focuses on the first of these objectives -products costing. COURSE GOALS Students, as future managers, will utilize, at a minimum, the output of cost systems, which are the primary internal information systems in a firm. Students taking this course will gain an understanding of cost accounting systems, which includes a familiarization with: The goals of cost accounting systems; the fundamental features and design of cost accounting systems; and the various uses of the data provided by cost accounting decisions. A sound understanding of these issues is necessary to interpret cost accounting system outputs; to transform them from data to information and knowledge. Without this understanding, cost accounting data is often mis-interpreted...
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...Review Questions: Chapter 4 - Job Costing True/False 1. The computation of the budgeted indirect manufacturing cost rate is identical to the budgeted indirect cost rate for service organizations. 2. Similar jobs can be recorded on the same job cost record in the job costing system. 3. The consumption of direct materials, direct manufacturing labor, and allocated manufacturing overhead are credited against work-in -process for the applicable period. 4. Indirect materials, indirect manufacturing labor, and utilities are classified as manufacturing overhead because it is not cost -effective to trace them directly to products or services. 5. The budgeted manufacturing overhead rate is the budgeted dollar amount of manufacturing overhead divided by the budgeted quantity of the cost driver. 6. There should seldom be under/over allocated manufacturing overhead in actual costing. 7. Inaccurate product costs can lead to information which does not accurately reflect the way various products use an organization's resources differently. 8. Non-traditional, non -financial variables are not important and, therefore, do not need to be considered during the cost -benefit test. 9. The traditional approach often accounts for indirect cost allocation bases as non -financial variables. 11. Costs incurred in other business functions (shipping, for example) associated with the product cannot be built-up and added to the manufacturing cost at a later date. 1 A . Cost assignment includes cost allocation...
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...ch05.qxd 9/27/04 4:19 PM Page 174 CHAPTER Q1 Q2 Q3 Q4 Q5 Q6 Job Costing In Brief Custom products and services, which are produced singly or in small batches, need to be valued for financial statements, tax reporting, and management monitoring. Job costing is an accounting method used to assign product costs to custom products or services. In job costing, direct costs are traced and overhead costs are allocated to individual jobs. Sometimes defects occur in custom products. Defective units can sometimes be reworked. The costs for both spoilage and rework need to be accounted for, as does the cost of scrap that arises from production. This Chapter Addresses the Following Questions: How are costs assigned to customized goods and services? How is overhead allocated to individual jobs? What is the difference between actual costing and normal costing? What are the uses and limitations of job cost information? How are spoilage, rework, and scrap handled in job costing? What are the quality and behavioral implications of spoilage? ch05.qxd 9/27/04 4:19 PM Page 175 BOMBARDIER: CUSTOM MANUFACTURING n 1942, the Canadian company L’AutoNeige Bombardier Limitée began manufacturing tracked vehicles for snow-covered terrain. These vehicles were early models of what later became snowmobiles. In English, L’Auto-Neige means snow car. Over time, the company developed expertise in building engines and expanded into other markets such as personal watercraft, aircraft, subway cars, buses...
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...wiL1084x_fm_i-xxiv_1.indd Page i 1/10/11 7:53:00 PM user-f499 /Users/user-f499/Desktop/Temp Work/Don't Delete Job/MHBR231:Wild:203 Managerial Accounting John J. Wild University of Wisconsin at Madison Ken W. Shaw University of Missouri at Columbia 3 rd edition wiL1084x_fm_i-xxiv_1.indd Page ii 1/10/11 9:14:31 PM user-f499 /Users/user-f499/Desktop/Temp Work/Don't Delete Job/MHBR231:Wild:203 To my students and family, especially Kimberly, Jonathan, Stephanie, and Trevor. To my wife Linda and children, Erin, Emily, and Jacob. MANAGERIAL ACCOUNTING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright 2012, 2010, 2007 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 ISBN 978-0-07-811084-9 MHID 0-07-811084-X Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim...
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...variable portion of advertising costs is a | | | Student Answer: | | Conversion YES... Period NO. | | | | Conversion YES .... Period YES. | | | | Conversion NO.... Period YES. | | | | Conversion NO.... Period NO. | | Instructor Explanation: | Chapter 2 | | | | Points Received: | 0 of 6 | | Comments: | | | | 2. | Question : | (TCO A) The costs of staffing and operating the accounting department at Central Hospital would be considered by the Department of Surgery to be | | | Student Answer: | | direct costs. | | | | sunk costs. | | | | incremental costs. | | | | None of the above | | Instructor Explanation: | Chapter 2 | | | | Points Received: | 0 of 6 | | Comments: | | | | 3. | Question : | (TCO A) The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n): | | | Student Answer: | | period cost. | | | | direct material cost. | | | | indirect manufacturing cost. | | | | direct labor cost. | | | | None of the above | | Instructor Explanation: | Chapter 2 | | | | Points Received: | 6 of 6 | | Comments: | | | | 4. | Question : | (TCO A) When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following? | | | Student Answer: | | Fixed costs per unit increase and variable costs per unit increase...
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...likely to use a job-order costing system of accumulating product costs rather than a process costing system? | | | Student Answer: | | a steel factory that processes iron ore into steel bars | | | | a factory that processes sugar and other ingredients into black licorice | | | | a costume maker that makes specialty costumes for figure skaters | | | | all of these | | Instructor Explanation: | Chapter 3 | | | | Points Received: | 5 of 5 | | Comments: | | | | 2. | Question : | (TCO F) Process costing would be appropriate for each of the following except: | | | Student Answer: | | custom furniture manufacturing. | | | | oil refining. | | | | grain milling. | | | | newsprint production. | | Instructor Explanation: | Chapter 4 | | | | Points Received: | 5 of 5 | | Comments: | | | | 3. | Question : | (TCO F) Assume there was no beginning work in process inventory and the ending work in process inventory is 70% complete with respect to conversion costs. Under the weighted-average method, the number of equivalent units of production with respect to conversion costs would be: | | | Student Answer: | | the same as the units completed. | | | | less than the units completed. | | | | the same as the units started during the period. | | | | less than the units started during the period. | | Instructor Explanation: | Chapter 3 | | | ...
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...internal users of accounting information. | | | | external users of accounting information. | | | | the Securities and Exchange Commission (SEC). | | Instructor Explanation: | Chapter 1, Page 7 | | | | Points Received: | 0 of 4 | | Comments: | | | | 2. | Question : | (TCO 1) Which of the following costs does not change when the level of business activity changes? | | | Student Answer: | | total fixed costs | | | | total variable costs | | | | total direct materials costs | | | | fixed costs per unit | | Instructor Explanation: | Chapter 1, Page 9 | | | | Points Received: | 4 of 4 | | Comments: | | | | 3. | Question : | (TCO 1) You own a car and are trying to decide whether or not to trade it in and buy a new car. Which of the following costs is an opportunity cost in this situation? | | | Student Answer: | | the trip to Cancun that you will not be able to take if you buy the car | | | | the cost of the car you are trading in | | | | the cost of your books for this term | | | | the cost of your car insurance last year | | Instructor Explanation: | Chapter 1, Page 9 | | | | Points Received: | 4 of 4 | | Comments: | | | | 4. | Question : | (TCO 1) Shula’s 347 Grill has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: materials, $4,080; hourly labor (variable), $5,200;...
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