Job Costing System

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Job Costing System
Page 5
Mei Lee Sherry Tou Wen Jin Sidney Jaime Reggie Lin
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The Process of Job Costing System

• (1) Total cost of labor and material are
  calculated and inputted into the Production Labor
  Transaction File and Materials Issuance
  Transaction File, respectively.
• (2) The two transaction files are then merged to
  form the Production Cost file, which contains the
  actual direct labor and direct material
  information. A copy of the Production Labor file
  is also sent to the Payroll department for wages
  calculation purpose. With the Production Cost
  file, sufficient information is available to
  create other useful reports.

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The Process (Cont)

• (3) First, materials and labor efficiency
  reports are printed (usage reports, and scrap and
  lost time report).
• (4) The Production Cost file is also used for
  cost allocation.
• (5) Manufacturing overhead is calculated and
  applied, and then compared to the budgeted
  Standard cost file for Overhead residual
  analysis.

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The Process (Cont)

• (6) Then the Production Cost file is compared to
  the budgeted Standard Cost file to produce the
  Standard cost variance report.
• (7) After the cost distribution process, the
  Production cost file becomes the Open Job Files,
  with overhead and direct materials and direct
  labor costs divided. With this new file, queries
  can be made to obtain job completion status which
  is printable.

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Threats in the Job Costing System

• 1. Inefficient use of materials theft of
  inventory
• 2. Loss of data due to no backup data security
• 3. Inaccurate recording of time card

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Controls to Mitigate Threats

• 1. Inefficient use of materials theft of
  inventory.
• Use budgeted and actual production cost of direct
  material to compare the efficiency (variance
  analysis).
• Separation of Duties Have different departments
  to tally the inventory and another to compare the
  number to the requisition.
• Have the manager to sign the materials
  requisition to approve the consumption of
  materials.
• Periodically count the inventory and compare to
  records
• Use of access card or key to the inventory. Only
  authorized personnel may access to it.

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Controls to Mitigate Threats

• 2. Loss of data due to no back up data security.
• Build master database, onsite and offsite.
• Keep a hard copy backups on tapes or disks.
• Print copies and send to other relating
  departments.
• Implement the usage of smartcard with user ID and
  password, and firewall for security.

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Controls to Mitigate Threats

• 3. Inaccurate recording of time card
• Have supervisors verify time card and sign the
  ticket.
• Use smart cards to record time in and out.
  Information should directly send to database and
  manager should verify time cards.
• Send original copy of time card directly to
  payroll to avoid tampering.