ACCT 2102 1nd Edition Lecture 5 Outline of Last Lecture II The Product Cost Systems III How to Handle Manufacturing Overhead A Before the Year Begins B During the Year C At the End of the Year Outline of Current Lecture IV Job Costing V Normal Costing Current Lecture Job Costing Reviewing from last class the job cost schedule or record is direct material DM used plus direct labor Dl plus manufacturing overhead MOH divided by the total units equals the individual unit cost Job costing can have a beginning balance as well Since jobs don t always start and finish in the same period Therefore the beginning blanace is any jobs that were worked on in a previous period You would then add this with MD ML and MOH and then divide by the units Normal Costing Normal costing though has three steps that we have previously mentioned The first step is calculating the POHR rate This rate is always in the units of either Direct Labor per hours or Machine per hours There is only one POHR per company If each individual job had its own POHR then it would be a direct cost not an indirect cost therefore we wouldn t even need this calculation Instead we would just add this to the product costs When calculating the POHR we use the budgeted balance or budgeted MOH The next step is allocating the POHR to MOH or Works in Process This is where we multiply the POHR to the actual allocation base DO not get this actual allocation base confused with the budgeted POHR at this point in time we need to know the actual amount of DL per hours or Machine per hours in order to know how they These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute allocated this budgeted POHR The last step is to close out the temporary MOH account by comparing the actual and allocated MOH If the actual is greater than the allocated then we have an underallocation If the actual is less than the allocated then we have an overallocation We can close the account to either Work in Process or Finished Goods
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