COSTING SYSTMES

Adanna Obeta
Mind Map by Adanna Obeta, updated more than 1 year ago
Adanna Obeta
Created by Adanna Obeta almost 4 years ago
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Ch.4 Job Costing

Resource summary

COSTING SYSTMES
1 Building Blocks:
1.1 Cost Object: the distinct type of job
1.2 Direct Cost Pools: traced seperately from indirect cost
1.3 Indirect Cost Pool: allocated to the cost object
1.4 Cost Pool: grouping of individual indirect cost items
1.5 Cost Allocation Base: a systmatic way to link an indirect cost/group of indirect cost to cost objects (#of machine hrs, or labour hrs)
2 Types of Costing Systmes
2.1 Job Costing: assigns cost to distinct units of a product or service
2.2 Process Costing: assign cost to masses of identical/similar units and compute unit costs on an average basis
3 Evaluating and Implementing Job Costing Systmes
3.1 1. Identify the job-> the cost object
3.1.1 2. Identify the direct cost of the object
3.1.1.1 3. Select the cost-allocation base to use for allocating the I.C to the cost object
3.1.1.1.1 4. Identify and add all the I.C into one I.C pool
3.1.1.1.1.1 5. Compute the I.C allocation rate
3.1.1.1.1.1.1 6. Compute the I.C assigned to the cost object
3.1.1.1.1.1.1.1 7. Compute the T.C of the distinct object by adding all DC/IC assigned to the job
4 Actual Budgeted and Normal costing chart
5 Adjustments for over-and underallocated cost
5.1 1. adjust the allocation base
5.1.1 2. prorate on the basis of the total amount of the allocated MOH cost in the ending blances of WIP, FG, COGS account
6 Definitions:
6.1 Source document: the origninal record that supprots journal entries in the accounting systmes
6.1.1 Job cost Records/job cost sheet: records and accumulates al the cost assigned to a specific job, strating when the work begins
6.1.1.1 Labour time sheet: contains info about the amount of labour time used for a specific job in spicific dept; source doucment for DML
6.1.1.1.1 MOH allocted: the amount of MOH allocted to distint types of jobs based on the budgeted rate multiplied by the actual qty of the allocation base used
6.1.1.1.1.1 Budgeted MOH: EST MOH/EST BASE
6.1.1.1.1.1.1 Underallocated I.C: occur when the allocated amount of I.C in an accounting period is less than the acutal amount
6.1.1.1.1.1.1.1 Overallocated I.C: when the allocated amount of I.C in an accounting period is greater than the acutual amount
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