Chapter 3 Job Order Costing

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Chapter 3Job Order Costing
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Types of Product Costing Systems
ProcessCosting
Job-orderCosting
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Types of Product Costing Systems
ProcessCosting
Job-orderCosting
Example companies1. Weyerhaeuser (paper
manufacturing)2. Reynolds Aluminum (refining
aluminum ingots) 3. Coca-Cola (mixing and
bottling beverages)
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Types of Product Costing Systems
ProcessCosting
Job-orderCosting
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Types of Product Costing Systems
ProcessCosting
Job-orderCosting
Example companies1. Boeing (aircraft
manufacturing)2. Bechtel International (large
scale construction) 3. Walt Disney Studios (movie
production)
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Pop Quiz ?

• Which of the following companies would be
  likely to use job-order costing rather than
  process costing?
• a. Scott Paper Company for Kleenex.
• b. Architects.
• c. Heinz for ketchup.
• d. Caterer for a wedding reception.
• e. Builder of commercial fishing vessels.

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Materials Requisition Form
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Employee Time Ticket
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Job Cost Sheet
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Application of Overhead(From Word Document)
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Practice with Overhead

• Actual manufacturing overhead 340,000
• Budgeted machine hours 10,000
• Budgeted direct labor hours 20,000
• Budgeted direct labor rate 14
• Budgeted manufacturing oh 364,000
• Actual machine hours 11,000
• Actual direct labor hours 18,000
• Actual direct labor rate 15
• POHR - Machine hours
• POHR - direct labor hours
  
• POHR - direct labor dollars
  

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Pop Quiz ?

• Job WR53 at NW Fab, Inc. required 200 of
  direct materials and 10 direct labor hours at 15
  per hour. Estimated total overhead for the year
  was 760,000 and estimated direct labor hours
  were 20,000. What would be recorded as the cost
  of job WR53?
• a. 200.
• b. 350.
• c. 380.
• d. 730.

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Fisher Company(From Word Document)
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Overhead Application Example

• RoseCo applies overhead based on direct- labor
  hours. Total estimated overhead for the year is
  640,000. Total estimated labor cost is
  1,400,000 and total estimated labor hours are
  160,000.
• What is RoseCos predetermined overhead rate?

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Overhead Application Example

• RoseCos actual overhead for the year was
  650,000 and a total of 170,000 direct-labor
  hours were worked.
• Using RoseCos predetermined overhead rate of
  4.00 per direct-labor hour, how much overhead
  was applied to all of RoseCos jobs during the
  year?

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Overhead Application Example

• RoseCos actual overhead for the year was
  650,000 and a total of 170,000 direct-labor
  hours were worked.
• Using RoseCos predetermined overhead rate of
  4.00 per direct-labor hour, how much overhead
  was applied to all of RoseCos jobs during the
  year?

RoseCo has overappliedoverhead for the yearby
30,000. What willRoseCo do?
SOLUTION Applied Overhead POHR Actual
Direct Labor Hours Applied Overhead 4.00 per
DLH 170,000 DLH 680,000
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Overapplied and Underapplied Manufacturing
Overhead
OR
RoseCos Method
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Overapplied and Underapplied Manufacturing
Overhead - Summary
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Pop Quiz ?

• Tiger, Inc. had actual manufacturing overhead
  costs of 1,210,000 and a predetermined overhead
  rate of 4.00 per machine hour. Tiger, Inc.
  worked 290,000 machine hours during the period.
  Tigers manufacturing overhead is
• a. 50,000 overapplied.b. 50,000
  underapplied.c. 60,000 overapplied.d.
  60,000 underapplied.