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Canada (158,433)
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ACC 406 (128)
Chapter 5

Chapter 5

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Ryerson University
ACC 406
Maurizio Di Maio

Chapter 5Joborder costing Characteristics of the joborder environment y Companies can be divided into 2 major types o Firms producing unique products or services require a joborder accounting system ex on pg 182 o Firms producing similar products or services can use a processcosting accounting system ex on pg 182 Process production and costing y Firms in process industries massproduce large quantities of similar products ex on pg 182 o Servicefirms can also use a processcosting approach ex on pg 182 o Unit costsprocess costs for the given periodoutput of the period This is called a processcosting systemy Comparison of joborderprocess costing on Exhibit 51 on pg 182 Joborder production and costing y Firms in joborder industries make a wide variety of services or products that r quite distinct from 1 anothero Job is 1 distinct unit or a set of units ex on pg 183 o Job is linked with a particular customer ordero Cost of 1 job differs from anothermust be kept track separately This is called joborder costing system In a joborder firm collecting costs by job provides vital information for managementNormal costing and overhead application y Unit costs r very important cuz managers need accurate cost information on materials labouroverhead when making decisionsActual costing versus normal costing y 2 ways r used to measure the costs associated with productiono Actual costing requires the firm to use the actual cost of all direct materials direct labouroverhead used in production to determine unit costo Normal costing requires the firm to assign actual costs of direct materialsdirect labour to unit producedto apply overhead to units based on a predetermined estimatey Actual costing
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