Lecture Fundamentals of cost accounting (4th edition): Chapter 7 - Lanen, Anderson, Maher

(BQ) Chapter 7: Job costing. After studying this chapter you should be able to explain what job and job shop mean. Assign costs in a job cost system. Account for overhead using predetermined rates. Apply job costing methods in service organizations. Understand the ethical issues in job costing, and describe the difference between jobs and projects.
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Lecture Fundamentals of cost accounting (4th edition): Chapter 7 - Lanen, Anderson, Maher© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. JobCosting Chapter7PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. 7-3 LearningObjectivesLO 7-1 Explain what job and job shop mean.LO 7-2 Assign costs in a job cost system.LO 7-3 Account for overhead using predetermined rates.LO 7-4 Apply job costing methods in service organizations.LO 7-5 Understand the ethical issues in job costing.LO 7-6 Describe the difference between jobs and projects.LO 7-47-1 DefiningaJob LO 7-1 Explainwhatjobandjobshopmean. Unit of a product that is easily distinguishable from other units Firm that produces jobsLO7-1 UsingAccountingRecords 7-5 inaJobShopLO 7-67-2 ProductionProcessatInShape LO 7-2 Assigncostsinajobcostsystem. Suppose InShape, Inc. manufactures custom workout and training equipment for schools and gyms.LO 7-77-2 RecordsofCostsatInShape Materials Work-in-process Direct materials 12-03 Total Raw 01-01 WIP materials 01-02 Indirect Overhead materialsLO 7-87-2 RecordsofCostsatInShape Labor Work-in-process Direct labor 12-03 Total 01-01 Labor WIP 01-02 Indirect Overhead laborLO 7-97-2 RecordsofCostsatInShape Overhead Work-in-process 12-03 Total 01-01 Overhead WIP 01-02 OH costs are applied to each job using the POHR.LO 7-107-2 InventoryAccounts On January 1, InShape has the following balances in each of its three inventory accounts: Direct materials inventory $30,000 Work-in-process inventory (Job 12-03) $41,000 Finished goods inventory (Job 12-02) $27,000 Now, let’s record January’s activities for InShape.LO 7-117-2 DirectMaterials InShape purchased $135,000 of raw materials on account. Materials Inventory Accounts Payable BB 30,000 17,000 BB (1) 135,000 135,000 (1)LO 7-127-2 DirectMaterials InShape used $12,000 of direct materials for 12-03. They also started 01-01 and 01-02 and used $102,000 and $15,000 of direct materials respectively. Materials Inventory WIP Inventory BB 30,000 BB 41,000 (1) 135,000 129,000 (2) (2) 129,000 WIP 12-03 WIP 01-01 WIP 01-02BB 41,000(2) 12,000 (2) 102,000 (2) 15,000LO 7-137-2 DirectMaterials Direct labor of $98,000 was incurred ($16,000 for 12-03, $71,000 for 01-01, and $11,000 for 01-02). ...