Systems Design—Job-Order Costing Show
Learning Objectives
Chapter Overview A. Costing Systems. Two major types of costing systems are used in manufacturing and many service companies: process costing and job-order costing.
B. Job-Order Costing—An Overview. The discussion in the text and below assumes that a paper-based manual system is used for recording costs. Cost and other data are recorded on materials requisition forms, time tickets, and job cost sheets. Of course, many companies now enter cost and other data directly into computer databases and have dispensed with these paper documents. Nevertheless, the data residing in the computer typically consists of a “virtual” version of the manual system. Since a manual system is easy for students to understand, we continue to rely on it when describing a job-order costing system.
C. Job Order Costing—The Flow of Costs . Exhibit 3-14 in the text provides a model for the cost flows in a job-order costing system.
D. Under- and Overapplied Overhead. Since the predetermined overhead rate is based entirely on estimated data, the actual amount of overhead cost incurred will almost always differ from the amount of overhead cost that is applied to the Work In Process account. The difference is termed underapplied or overapplied overhead, and as discussed above, can be determined by the ending balance in the Manufacturing Overhead control account. An underapplied balance occurs when more overhead cost is actually incurred than is applied to the Work In Process account. An overapplied balance results from applying more overhead to Work In Process than is actually incurred.
When overhead is Overapplied manufacturing overhead must be close out the account?80 Cards in this Set. What methods can be used to dispose of under applied or over applied manufacturing overhead?what methods can be used to dispose of underapplied or overapplied manufacturing overhead? -allocating it among work in process, finished goods, and cost of goods sold.
What methods can be used to dispose of Underapplied or Overapplied manufacturing overhead quizlet?What methods can be used to dispose of underapplied or overapplied manufacturing overhead? Close it to Cost of goods sold. Allocate it to Work in process, Finished goods, and Cost of goods sold.
What side of the manufacturing overhead account is applied manufacturing overhead entered on?What side of the Manufacturing overhead account is actual manufacturing overhead entered on? Applied overhead goes on the credit side. Manufacturing overhead of $120,700 was applied to production using the company's predetermined overhead rate.
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