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ACC 410 (34)
Chapter 5

Chapter 5

2 Pages
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Department
Accounting
Course Code
ACC 410
Professor
Keith Whelan

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Chapter 5 Job Costing
Product costs costs involved in either making or purchasing a product, and they are called
manufacturing or inventoriable, costs
Period costs operating costs that are not part of making or purchasing a product
Managers prepare
-Schedule of cost of goods sold (as part of income statement)
-Schedule of cost of goods manufactured
-what goes into making a product consists of 3 main components:
direct materials that become part of a product (cost object)
direct labour that includes the wages paid to the operator or assembly workers
manufacturing overhead
prime cost direct materials and direct labour combined
conversion cost direct labour and manufacturing overhead combined
Cost of goods sold = Beginning Merchandise Inventory + Purchases Ending Merchandise
Inventory
Product Cost Flows
- raw materials used directly moved into work-in-process inventory account
- raw materials used indirectly moved into manufacturing overhead control
account (exp acc)
-cost of operation or assembly-line workers directly into work-in-process inventory
account
-indirect labour costs accumulated in manufacturing overhead control account
-at the end of a period, fully completed products are transferred from work-in-process
inventory account to the finished goods account
-when products are sold, total costs are transferred from finished goods account to
cost of goods sold account
Process Costing allocates both direct and overhead costs to continuous-flow processing
lines
approach generally used for mass-produced products
direct and indirect costs are traced and allocated to production departments and
then allocated to units
industries that use process costing include food and beverage manufacturers,
petroleum refiners, and plastic and metal manufacturers
Job Costing process of assigning costs to custom products or services
job specific product/service requirements order placed by customer
manufacturers that use job costing include aircraft builders, custom motorcycle
and automobile manufacturers, and custom jewellers, among others; also used in
service industry organizations like hospitals, accounting firms, and repair shops
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Description
Chapter 5 Job Costing Product costs costs involved in either making or purchasing a product, and they are called manufacturing or inventoriable, costs Period costs operating costs that are not part of making or purchasing a product Managers prepare - Schedule of cost of goods sold (as part of income statement) - Schedule of cost of goods manufactured - what goesinto making a product consists of 3 main components: direct materials that become part of a product (cost object) direct labour that includes the wages paid to the operator or assembly workers manufacturing overhead prime cost direct materials and direct labour combined conversion cost direct labour and manufacturing overhead combined Cost of goods sold = Beginning Merchandise Inventory + Purchases Ending Merchandise Inventory Product Cost Flows - raw materials used directly moved into work-in-process inventory account - raw materials used indirectly moved into manufacturing overhead control account (exp acc) - cost of operation or assembly-line workers directly into work-in-processinventory account - indirect labour costs accumulated in manufa
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