Chapter 3 Job Costing I Methods Used to Determine Costing A Process Costing identical units through series of uniform production steps or possesses used by companies that produce extremely large numbers of a Costs are averaged by taking cost of production and hoe many products are produced b Oil Refining Food Beverage Industry paper products etc B Job Costing relatively small batches of different products used by companies that produce unique custom orders products or a Used when time series materials and costs vary depending on job b Large differences between jobs II Determining a Jobs Cost A Raw Materials Work In Progress Inventory Finished goods Inventory Cost of Goods Sold When good is sold B Purchasing Raw Materials a Engineers prepare a bill of materials b Order materials not inventory c Pull supplies from store room C Tracing Direct Labor a Track hourly workers how many hours it takes to work on a task D Allocating Manufacturing Overhead a Company Estimates Total Manufacturing Overhead Costs for the b Company selects an allocation base and estimates the total amount that Coming Year will be used during the year c Calculate predetermined Manufacturing Overhead MOH i Total estimated MOH Costs Total Estimated amount of the allocation base d Allocates some MOH to e individual job i MOH allocated to a job Predetermined MOH rate actual amount of allocation base used by the job III Dealing with over allocating or under allocating Manufacturing Overhead A MOH Allocated MOH Actual MOH Under allocated Jobs were undercoated a Cost of Goods Sold is too low Increase Cost of Goods Sold to the amount of the under allocation B MOH Allocated MOH Actual MOH Over allocated Jobs were Overcastted a Cost of Goods Sold is too High Decrease COGS for the amount of Read 124 126 over allocation
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