Assignment 2 Costing Assignment 2 BUS 5110 Managerial Accounting Term 5, 2018- In this paper,

There are various cost accounting techniques used to measure the cost of the product. When the goods are produced only against special orders, job costing is used by firms. It is generally used when like units are to be manufactured, compare and contrast job order and process costing systems that too in a continuous flow. The method for treating over or under absorbed overheads in both costing systems is almost the same. As process costing does not have different batches, the costs are allocated systematically.

Explains that jdcw’s cost drivers are unit-based, while overhead costs are independent of units or volumes, not “driven” by labor hours or machine hours. Explains that only assembly and finishing costs are considered product costs. Sales and administrative costs, are treated as period costs against related revenue for the same time period. Manufacturing Costs Management sometimes needs additional information to make decisions and needs the costs categorized as prime costs or conversion costs. Prime costs and conversion costs are not included together as direct labor is included in both categories. Cost is calculated based on work performed as per customer requirement/instructions.

Advantages & Disadvantages of Job Order Costing & Process Costing

Process cost systems have a Work in Process Inventory account for each department or process. Accounting SystemsAccounting systems are used by organizations to record financial information such as income, expenses, and other accounting activities. They serve as a key tool for monitoring and tracking the company’s performance and ensuring the smooth operation of the firm. Accounting systems are used by organizations to record financial information such as income, expenses, and other accounting activities. Staff time cards can be used to track labor costs until they are assigned to production. To build your budget, review your income statement and other financial statements for last year.

The Ultimate Planner is a printed planner designed to make every small business owner’s life just a bit easier. Sales have been great, but they are now in a position to really get down to ensure that they are making money on each planner they sell. In the first stage of production, Coca-Cola mixes direct materials—water, refined sugar, and secret ingredients—to make the liquid for its beverages. The second stage includes filling cleaned and sanitized bottles before placing a cap on each bottle.

Differences between job order costing and process costing:

Process costing is different from job costing because it tracks all the steps involved in producing a single item. For example, if you sell widgets, you would use process costing to determine what it takes to make a widget. You might find out that it costs $1.00 to make a widget, but then you may discover that it costs more than that because you must pay someone else to do some of the work. To accurately track these process costs, an information system that allows your staff to easily record this activity is crucial. Hannah also has to keep her staff accountable for using these systems every day because if they don’t, the company can’t track product costs.

• The process of production does not change because of the costing method.
• The demand for JDCW’s products had problems due to the collapse of farmland value and commodity prices.
• In this example, two groups—administrative and manufacturing—report directly to the chief financial officer .
• Here process refers to a separate stage where production is performed to convert the raw material into an another identifiable form.
• Costs are likely to be accumulated at the department level, and no lower within the organization.
• Explains that job costing involves situations where every job is done differently, and consumers specifications play a bigger picture in this case.