Financial and Managerial Accounting, 8e
15-1
CHAPTER 15
JOB ORDER COSTING AND ANALYSIS
Related Assignment Materials
Student Learning Objectives
Questions
Quick
Studies*
Exercises*
Problems*
AA and
BTN
Conceptual objectives:
order production.
3, 4
15-2, 15-15
BTN 15-2, BTN 15-5,
C1. Describe important features of job
10, 11, 12,
15-1, 15-3
15-1
BTN 15-2, BTN 15-3,
they are used in job order costing.
Analytical objectives:
A1 Apply job order costing in pricing
services.
2, 14
15-13, 15–14
15-18, 15–19
Procedural objectives:
P1. Describe and record the flow of
materials costs in job order
costing.
5, 6
15-4, 15-10
15-4, 15-5,
15-6, 15-7,
15-8, 15-13,
15-20
15-1, 15-2,
15-3, 15-5, SP
GL 15-1
AA 15-1, AA 15-2,
AA 15-3, BTN 15-6
*See additional information on next page that pertains to these quick studies, exercises, and problems.
SP refers to the Serial Problem
AA refers to Accounting Analysis
BTN refers to Beyond the Numbers
Describe and record the flow of overhead costs in job order costing.
Apply Estimated Overhead – Illustration
1:22
Record Actual Overhead
2:19
Determine adjustments for overapplied and underapplied factory overhead.
Financial and Managerial Accounting, 8e
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Additional Information on Related Assignment Material
See Chapter 1 of the Instructor’s Resource Manual for more information on materials for this text available in
Connect.
Connect
Available on the instructor’s course-specific website, Connect:
• All numerical Quick Studies, all Exercises and Problems Set A.
Hints/Guided Examples
Please note that the Guided Examples are labeled as “Hints” in Connect assignments. The animated PowerPoints without
Need-to-Know Videos
LO
Need–to-Know
Title
Time
C2
15-1
Job Cost Sheet
1:01
15-2
Recording Direct Materials
1:04
15-3
Recording Direct Labor
0:53
15-4
Recording Applied Overhead
1:51
15-5
Recording Actual Overhead
1:30
15-6
Adjusting Overhead
1:56
Concept Overview Videos, (COV’s)
LO
Title
Time
C1
Describe important features of job order production.
Job Order Production
1:25
Production Activities in Job Order Costing
1:07
Cost Flows
1:01
C2
Explain job cost sheets and how they are used in job order costing.
Job Cost Sheet
0:56
Job Cost Sheet – Cost Flows
2:03
Apply job order costing in pricing services.
Pricing for Services
P1
Describe and record the flow of materials costs in job order costing.
Materials Cost Flows and Documents
1:00
Materials Cost Flows – Journal Entries
0:48
P2
Describe and record the flow of labor costs in job order costing.
Labor Cost Flows and Documents
0:41
Labor Cost Flows – Journal Entries
0:41
Financial and Managerial Accounting, 8e
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Synopsis of Chapter Revision
NEW opener—HoopSwagg and entrepreneurial assignment.
Revised discussions of manufacturing costs and link between job cost sheets and general ledger.
Added graphic linking job cost sheets and general ledger accounts.
Financial and Managerial Accounting, 8e
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Chapter Outline
I. Job Order Costing
A. Cost accounting system
1. Accumulates manufacturing costs and assigns them to products and services.
3. Two basic types of cost accounting systems are job order costing and process costing.
a. Job Order Production—producing products or providing services individually designed to
16.
B. Production Activities in Job Order Costing
an overview of job order production activity and cost flows is shown in Exhibit 15.2.
1. Cost Flows:
a. Because they are product costs, manufacturing costs flow through inventory accounts
(Raw Materials Inventory, Work in Process Inventory, Finished Goods Inventory) until
2. Job Cost Sheet—separate record maintained for each job used to record costs.
a. Classifies costs as direct materials, direct labor, or overhead.
b. Used by managers to monitor costs incurred to date and to predict and control costs to
complete each job.
c. Accumulated job costs are kept in the Work in Process Inventory while goods are being
II. Materials and Labor Costs Flows
1. Cost Flows and Documents—the three cost components and documents used to account for
them are:
Materials Cost Flows and Documents
2. Materials Purchases – includes direct and indirect materials. Updates to individual materials
Financial and Managerial Accounting, 8e
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ledger cards. Debit Raw Materials Inventory to increase.
3. Materials Use (Requisition)
a. Materials Requisition⎯document identifying the type and quantity of material needed in
4. Labor Cost Flows and Documents
a. Time tickets – used by employees to record hours worked. Used to determine total
labor costs for pay period. They indicate how much time employees spent on each
III. Overhead Costs
a. Overhead costs can’t be traced to individual jobs. The accounting for overhead
follows a 4-step process shown in Exhibit 15.11. Managers must first estimate total
b. Step 1: Set Predetermined Overhead Rate
i. Requires an estimated of total overhead cost and an allocation factory such as
total direct labor, total labor hours, or total machine hours.
c. Step 2: Apply Estimated Overhead to Specific Jobs
i. Predetermined overhead rate times actual activity where the activity is the
allocation base such as direct labor cost, direct labor hours, machine hours.
d. Step 3: Record Actual Overhead costs
i. Actual factory overhead costs include indirect materials, indirect labor, supplies,
utilities, adjusting entries for depreciation on factory assets, etc.
iv. Other sources include vouchers authorizing payments for items such as supplies
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e. Step 4: Adjusting Factory Overhead—
i. Factory Overhead T-Account
a) The debit side shows the actual amount of factory overhead incurred during
the period based on bills received.
credited to Cost of Goods Sold.
6. Summary of Cost Flows—Summary journal entries are used to record cost flows as
follows:
a. Into (debit) Raw Materials Inventory as acquired.
b. From (credit) Raw Materials Inventory to (debit) Work In Process Inventory (direct
materials) and (debit) Factory Overhead (indirect materials) as good are requisitioned.
7. Schedule of Cost of Goods Manufactured
a. Similar to statement covered in chapter 14.
b. Key difference: total manufacturing costs include overhead applied rather than actual
overhead costs.
III. Decision Analysis—Pricing for Services
A. Service providers also use job order costing.
B. Procedure to determine:
1. Determine direct labor costs
Financial and Managerial Accounting, 8e
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Chapter 15 Alternate Demo Problem
The following information is the Work in Process and Factory Overhead
Accounts for Superior Company:
Work in Process Inventory
Beg Inv. 302,000
Finished Goods Inv. 548,000
Required:
1. Prepare a manufacturing statement for Superior Company for 2019.
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Chapter 15 Solution: Alternate Demo Problem
SUPERIOR MANUFACTURING COMPANY
Manufacturing Statement
For Year Ended December 31, 2019
Direct materials used …………………………………….
$280,000
Direct labor …………………………………………………..
120,000
Total manufacturing costs …………………………….
Work in Process Inventory 1/1/19……………….
Total goods in process during the year ………….
Adjusting entry for under or over-applied overhead
Factory Overhead
Actual Overhead 98,000
96,000 Applied Overhead
Under applied 2,000
Dec 31
Cost of Goods Sold