1. Describe the building-block concepts of costing systems
2. Distinguish job costing from process costing
3. Outline the seven-step approach to job costing
4. Distinguish actual costing from normal costing
5. Track the flow of costs in a job-costing system
6. Dispose of under- or overallocated manufacturing overhead costs at the end of the fiscal year using alternative methods
7. Apply variations from normal costing
II. CHAPTER SYNOPSIS
Chapter 4 outlines the basics of costing systems by illustrating the accounting for costs in a typical job-costing system. Two more key terms, cost pool and cost-allocation base, are introduced in this chapter. A cost pool is any grouping of cost items. A cost-allocation base is the allocation basis used to allocate the costs in the cost pool to the cost object. For example, machine hours might be the cost-allocation base used to allocate equipment maintenance costs to the products produced since there is usually a cause-and-effect relationship between the number of machine hours and the level of maintenance required.
The chapter distinguishes job-costing systems from process-costing systems. Job-costing systems track costs to distinct jobs, while process-costing systems apply the average cost to each unit of a large batch of identical or similar products. The seven-step process to job-costing is outlined, and normal-costing systems using standard costs are compared to actual-costing systems which use actual costs. The total of actual indirect costs often differs from the total of indirect costs applied in standard-costing systems and the chapter illustrates how to account for any underallocation or overallocation of indirect costs at the end of the fiscal period. Three common methods for allocating any indirect costs allocation variances are the adjusted allocation-rate approach, the proration approach, and the write-off to cost-of-goods-sold approach. III. CHAPTER OUTLINE
Costs assigned to a cost object are either fixed or variable, and direct or indirect. Cost tracing is the term for assigning direct costs; cost allocation is the term for assigning indirect costs. Two more key terms, cost pool and cost-allocation base are introduced in this chapter. A cost pool is any grouping of cost items. A cost-allocation base is the allocation basis used to allocate the costs in the cost pool to the cost object. For example, machine hours might be the cost-allocation base used to allocate equipment maintenance costs to the products produced since there is usually a cause-and-effect relationship between the number of machine hours and the level of maintenance required. These five terms form the building blocks used to design the costing systems discussed in this chapter.
Do Chapter Quiz #1.Assign Exercise 4-21and Problems 4-31 and 4-32.
Two basic types of costing systems used by management accountants are job-costing systems and process-costing systems. Job-costing systems are typically used by companies producing small quantities of distinct products or services, for example a home builder or an automotive repair shop or an advertising agency. Job-costing systems accumulate and track costs separately for each product or service. Process-costing systems are typically used by companies producing large quantities of identical or similar products, for example an oil refinery or a dairy or a steel mill. Process-costing systems accumulate and track the costs of each batch and divide the total costs by the units produced to determine average unit cost.
(Exhibit 4-1 offers examples of job costing and process costing in different sectors.) (Exhibits 4-2 and 4-3 display sample job-cost records.)
Do Chapter Quiz #2.Assign Exercise 4-16 PHGA.
A general approach to assigning costs in a job-costing system involves seven steps:
Joborder costing or simple job costing is an accounting system where manufacturing costs are assigned to a product or different groups of products. This system is different from simple process costing as it is applied in the situations where each and every product being produced, is different from others, so that the manufacturing cost of each product could be calculated separately. Here, a separate record of costs is kept for each product (as in case of custom home building business) or customer (as in case of individual cheques for customers in a restaurant).
So, Joborder costing systems are used as accounting records in companies that provide customized products, for keeping the individual record of each product being manufactured, sold or any transaction being made. It will report the cost of direct materials, direct labor and the actual manufacturing overhead consumed in completing each job.
Restaurants and customed-service providers are perfect examples of businesses that need to follow job costing in order to follow each product or job. The job cost records work as the ledger or accounting documentation for keeping the records of inventories of work-in-process, finished goods and the cost of goods sold.
Generally, cost assignment problems are more complex in a joborder costing system...
The terms "order winners" and "order qualifiers" were coined by Terry Hill, professor at the London Business School, and refer to the process of how internal operational capabilities are converted to criteria that may lead to competitive advantage and market success. In his writings, Hill emphasized the interactions and cooperation between operations and marketing. The operations people are responsible for providing the order-winning and order-qualifying criteria—identified by marketing—that enable products to win orders in the marketplace. This process starts with the corporate strategy and ends with the criteria that either keeps the company in the running (i.e., order qualifiers) or wins the customer's business.
AND COMPETITIVE PRIORITIES
Many factors shape and form the operations strategy of a corporation, for example, the ever increasing need for globalizing products and operations and thus reducing the unit cost, creating a technology leadership position, introducing new inventions, taking advantage of mass customization, using supplier partnering, and looking for strategic sourcing solutions. All of these factors require an external or market-based orientation; these are the changes that take place in the external environment of the company.
Traditionally, strategic decisions were...
...The Importance of Orders
The United States Army is a professional organization and many things contribute to it being so. One of the main factors contributing to the Army keeping its professional standard is order. Order helps keep the Army functional and keeps it organized so that we may stay above the civilian world standards.
What is order? Order is usually a command given by a superior. We are taught from the beginning of basic training that you do what you’re told to do by senior personnel. You are not supposed to question their authority even if you doubt their abilities or choice of their command, be it may be right or maybe wrong. You just do what you’re told when told. Us as privates better know it as, salute and execute. When higher ranking personnel give orders they are more than likely for a good reason. The orders are passed down the hierarchy of ranks and are expected to be executed with no questions, back talk and or abruptions. Orders are not given just so that the one giving them can hear themselves talk. They are given so that the consequences of given orders benefit us and mold us into better soldiers. For example, if we do something against our sergeant’s orders, we receive corrective training. We do not get the corrective training just because we think our sergeant does not like us. We receive corrective...
...ORDER AND SALES SYSTEM OF BIANO’S PIZZA
Ordering system through out the world has relied on pens and papers. Problems suchas missing orders and information sent to the wrong place arise. Furthermore, some could not be able to handle the massive volume of orders. Under the old manual ordering systems, it takes up too much time to process. Real time ordering and improved efficiency has been the focus of entrepreneurs. As with many business scenarios, getting rid of paper improves efficiency, reduces human error and allows information to flow to an infrastructure without a time consuming data input process. There is also less chance of handwritten orders being misread and a higher customer turn around as customers will be served faster. In accordance to this, the software developers proposed the BIANO’S PIZZA computerized ordering system. Thesystem is developed specially to meet the needs of BIANO’S PIZZA.
Scope and Limition :
BIANO’S PIZZA Ordering system is an integration of different operations: ordering, pricing, and billing systems, customers input orders directly into the computer, which communicates the customer’s order to the kitchen. The fixed terminal number identifies which customer ordered which. A staff prints out the bill. Additional orders may be accepted by the kitchen only if the bill hasn’t been printed.
Statement of the...
...JOB DESIGN AND TECHNIQUES OF JOB DESIGN
A job can be defined as the set of tasks and responsibilities of a worker. These tasks and responsibilities, along with performance expectations, work conditions (time and place of work), general skills, and possibly methods to be used, are normally contained in a written job description. There is no set formula for designing jobs that will best fit a production system.
Also, a job is also reffered to an activity, often regular, and often performed in exchange for payment. A person usually begins a job by becoming an employee,volunteering, or starting a business. The duration of a job may range from an hour (in the case of odd jobs) to a lifetime (in the case of some judges). The activity that requires a person's mental or physical effort is work (as in "a day's work"). If a person is trained for a certain type of job, they may have a profession. The series of jobs a person holds in their life is their career.
Types Of Job
There are a variety of jobs: full time, part time, temporary, odd jobs, seasonal, self-employment.
People might have a chosen occupation for which they have received training or a degree.
Those who do not hold down a steady job may do odd jobs or be unemployed....
...doing their job. Deaths can be averted however, if every member of every crew follows The Ten Standard Firefighting Orders and The Eighteen Watchout Situations. These two lists of commands and warnings were developed by a task force in nineteen fifty seven to prevent any casualties during fighting of wildland fires. They are modeled in part by general orders followed by the United States Armed Forces and the research of sixteen tragedy fires. If always followed correctly and memorized, danger can be avoided to a certain extent. Today I’m going to talk about Standard Firefighting Order number eight, “Give clear instructions and be sure they are understood.”
In a position of power or leadership, there are several reasons why it is important to always give clear instructions and be sure they are understood such as: the prevention of injury, the prevention of death, productivity, ethics, accountability, general order, and even the common pride of fulfilling duty. At some point in his or her career, each fire fighter will eventually experience some role of leadership, whether that be an actual appointed position or a temporary need for initiative in the absence of a figure of guidance. It is important that they give clear instructions and be sure they are understood or they will most likely fail at the assignment they are supposed to carry out and could potentially cause chaos and loss.
...corporate headquarters in Kingston.
Management is looking for ways to make order processing more efficient.
This is how the firm’s order processing works. A customer can call, fax, or mail in an order. A
customer service representative (CSR) writes down the order information on an order pad. This
information includes the customer name, shipping address, billing address, product number, product
description, quantity, and shipping instructions (such as to call the receiving manager to make an
appointment for delivery.) After gathering all the relevant information, the representative confirms the
entire order with the customer.
While taking down the order information, the CSR accesses the company’s order entry system and
checks the inventory for each product ordered. The CSR first checks the warehouse closest to the
customer’s shipping address. If the product is not available there, the representative checks another
warehouse. If the order is placed on the telephone, the CSR suggests a delivery date, which is 4 to 5
business days away. If the customer needs the order sooner, the CSR queries the existing order entry
information system to see which warehouse might have the inventory to fulfil the order. Generally the
order will be filled by the warehouse closet to the customer’s...
...to carry out its deeds.
The second part of the concept is the Natural Order of the world. This can be brought down to its base form as: 'What is supposed to happen.' Unfortunately, it isn't that simple. The Natural Order exists always, however is not always followed. This 'breaking away' from the Order is usually the result of Human Intervention, developing one of two outcomes.
These are: either the Natural Order is re-aligned, or the world remains a corrupt and terrible place until such time as the first outcome is realised. So, the world is repaired, or an unending loop of badness ensues until it is.
In the play, the Order was broken when Claudius killed King Hamlet, and from the opening lines the 'wrongness' that lingers in the air is noted, setting the mood for the remainder of the play: "...'tis bitter cold and I am sick at heart." (I,1,8-9) said Francisco as he was relieved from watch-duty. Also, in the film, these words are greatly aided in their purpose by the images of snow-covered Denmark. Another line, in the fourth act: "something is rotten in the state of Denmark" (I.4.67) reaffirms this mood and goes further to place Francisco's sickness at heart down to a rottenness in Denmark.
Now, how the world is realigned with the Natural Order is the link back to the first part of the concept: Humans are the creatures, knowingly or unknowingly, that fix the problems that throw the...