(精品)ACCT2102-Lecture4(stds)

,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,ACCT1101, Lecture 2,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,ACCT 2102,Lecture 4:,Job Costing,Product,& Service Costing,1,Reading:,Lecture notes &,Horngren et al. Chapter 4,Learning Objectives,Define product costing.,Distinguish,job costing,from,process costing.,Explain costing products or services using Job Costing.,Explain end of period adjustments.,2,1. Product,Costing,Product costing,is the process of,accumulating, classifying and,assigning,direct materials (DM), direct labour (DL) and manufacturing overhead (O/H) costs,to products,or,services.,Several types of,product costing systems,are available depending on,the,nature,of the product, and,the method of,overhead assignment,chosen,3,2. Job-order costing versus process costing systems.,4,ProcessCosting,Job-orderCosting,The,cost object,is a unit or multiple units of,distinct,(unique) product or service called a,job,.,Example of job order costing applications:,Special-order printing,Building construction,Also used in the service industry,Security company (Olympics games),Law and audit firms,Job-order costing versus process costing systems:,5,Job-orderCosting,ProcessCosting,Many units of a single,homogeneous,product flow evenly through a continuous production process (e.g. soft drink manufacturer).,One unit of product is,indistinguishable,from any other unit of product.,Each unit of product is assigned the,same cost (average cost).,It can also applied to homogeneous services.,Lecture 6,3. Costing products or services using a Job-Order,Costing,System,Sequence of events:,6,Receive orders from customers,Schedulejobs,Ordermaterials,Begin production,The job in this system is driven by the customer.,For example:,Job-Order Costing,We need to know three things:,The,cost components,of the job/order,The,source documents,to identify these components,How to,classify,these costs in terms of,direct,and,indirect,costs,7,Job Costing,Cost Components,8,THE JOB,Directmaterial,Direct labour,Traced directly to each job,Traced directly to each job,Manufacturingoverhead (OH),Applied to eachjob,Job Costing,Document Flow Summary,-,Materials,9,Job Cost Sheets,MaterialsRequisition,Direct,materials,Indirect materials,Manufacturing Overhead Account,Materials used,may be eitherdirect orindirect.,Direct Materials,DMs,are materials that become an integral part of the product and that can be conveniently traced directly to the product.,10,DM cost,=,Cost of material + in-transit costs,Acquisition (initial) cost; Freight; insurance; storage (before delivery); less discounts and allowances.,Materials-related costs treated as overhead =,Costs of purchasing; receiving; inspecting; and storing less scrap revenue,Job order Costing,Document Flow Summary,-,Labour,11,Job Cost Sheets,Employee Time Ticket,Manufacturing Overhead Account,Direct Labour,Indirect Labour,An employeestime may be eitherdirect or indirect.,Further Classification of,Labour Costs,12,Idle Time,Treated as manufacturing overhead cost,Overtime Premium of Factory Workers,Treated as manufacturing overhead cost,Sequence of Events in a Job Costing System,13,Manufacturing Overhead,Job No. 1,Job No. 2,Job No. 3,Charge direct material and direct labour costs to each job as work is performed.,Direct Materials,Direct Labour,What about,The OH expenses?,Job Costing,Document Flow Summary,14,EmployeeTime Ticket,Job Cost Sheets,MaterialsRequisition,Other OHCharges,(e.g. factory insurance, rent, etc.),IndirectMaterial,IndirectLabour,AppliedOverhead,Manufacturing OH Control Account (Pool),Now lets see how do we show the three components of cost in the relevant accounts?,Job System Cost Flows,Raw materials,15,Raw Materials A/C,Material,Purchases,Mfg. Overhead A/C,Work in Process A/C(Job Cost Sheet),Actual,Applied,Job System Cost Flows,Raw materials,16,Raw Materials A/C,Material,Purchases,Mfg. Overhead A/C,Work in Process A/C(Job Cost Sheet),Direct Materials,Direct Materials,Indirect Materials,Indirect Materials,Actual,Applied,17,Next lets add labour costs and applied manufacturing overhead to the job-order cost flows.,Job Cost System Flows,Job Costing System Flows,Labour cost,18,Raw Materials A/C,Accs payable -Material,Purchases,Mfg. Overhead A/C,Work in Process,A/C,(Job Cost Sheet),Direct Materials,Direct Materials,Indirect Materials,Indirect Materials,Actual,Applied,Labour Control,A/C,Wages payable,Direct Wages,Indirect wages,Indirect wages,Direct Wages,Sequence of Events in a Job-Order Costing System,19,Apply,overhead to each job using a,pre-determined rate,.,Direct Materials,Direct Labour,Job No. 1,Job No. 2,Job No. 3,Manufacturing Overhead,?,?,?,Allocating overhead costs,by dividing total overhead costs by total products manufactured (jobs),BUT!,Not all products (jobs) require/use the same amount of overhead!,Need to use the most appropriate costing system,20,Actual Costing System.,A job-costing system that uses,actual,costs to determine the cost of individual jobs.,Actual costing,assigns,indirect costs to a cost object by using the actual rate(s) times the actual quantity of units of the allocation base consumed by the cost object.,21,Total manufacturing overhead cost,Total units in the,allocation base,(e.g. DLH),AOHR =,From Actual Costing to Normal Costing System,Problem of actual costing,Unable to allocate overhead to jobs until all overhead costs are incurred and all labour worked on the jobs.,Solution ,Use Normal costing,Calculate,predetermined overhead rate (POHR),22,The Need for a Predetermined Manufacturing Overhead Rate,Using,a predetermined rate makes,it possible,to,estimate,total job costs,sooner,.,23,$,Allocation of Manufacturing Overhead,The predetermined overhead rate (POHR) used to allocate overhead to jobs is determined,before,the period begins.,24,Estimated,total manufacturingoverhead cost for the coming period,Estimated,total units in the,allocation base,for the coming period,POHR =,Ideally, the allocation base is a cost driver that causes overhead,.,Allocation of Manufacturing Overhead,25,Overhead allocated,=,POHR Actual activity,Actual,amount of the,cost driver,such as units produced, direct labour hours, or machine hours. Incurred during the period.,Based on,estimates,and determined before the period begins.,Example: Overhead Application,Printers Ltd allocates overhead based on direct labor hours.,Total estimated overhead for the year is,$640,000,.,Total estimated labour cost is $1,400,000.,Total estimated labour hours are,160,000 hours,.,What is Printers Ltd predetermined overhead rate (POHR) per hour?,26,Answer: Overhead Allocation Rate,27,Meaning,For each direct labour hour worked on a job, $4.00 of factory overhead cost will be applied to the job.,POHR = $4.00 per DLH,$640,000,160,000 direct labour hours (DLH),POHR =,Estimated total,manufacturingoverhead cost,for the coming period,Estimated total,units in theallocation base,for the coming period,POHR =,Quick Check 1:Job WR53 at WOW Ltd required $200 of direct materials and 10 direct labour hours at $15 per hour. Estimated total OH for the year was $760,000 and estimated direct labour hours (allocation base for OH costs) were 20,000.,What would be recorded as the cost of job WR53?,28,$200,$350,$380,$730,Job Costing System Flows - OH,29,Mfg. Overhead,Salaries and Wages A/C,Work in Process(Job Cost Sheet),Direct Materials,Overhead Applied,OverheadApplied to Work inProcess,Direct Labour,Direct Labour,IndirectLabour,IndirectLabor,Indirect Materials,Actual,Applied,If actual and allocated manufacturing overheadare not equal, a year-end adjustment is required.,Other,30,Now lets complete the goods and sell them.,Job Costing System Flows FG & COGS,Job-Order System Cost Flows,31,Finished Goods,A/C,Cost ofGoodsMfd.,Cost ofGoodsMfd.,Cost of Goods Sold,A/C,Work in Process,A/C,(Job Cost Sheet),Direct Materials,Direct Labour,Overhead Applied,Cost ofGoodsSold,Cost ofGoodsSold,Example:,ACCT2102 - Lecture 4 - Job Costing.wmv,Quick Check 2:Wheeled Coach Industries uses a job costing system. Which of the following costs are recorded in the job costs record?,32,Costs of engineers, designers and painters.,Costs of electricians, wires and equipment depreciation.,Costs of paint, fibreglass components and carpenters.,Costs of designers, electricians and wood.,33,Cost Measurement? Actual, Normal or Standard Costing,DM,Actual Actual,Budgeted,(P and Q) for Actual Output,+ + +,DL,Actual Actual,Budgeted,(P and Q) + + for Actual Output,+,O/H,ActualRate,Budgeted,Rate Budgeted Rate,*,actual,use*,actual,use *,std,use,of allocn baseof allocn base of allocn base,(used for cost,control and,Total,performance evaluation),Actual,Normal,Standard,Actual vs. Normal (Predetermined) O/H Rate,Actual Costing Systems:,use actual overhead costs for the,numerator,Use actual,(quantity or cost) of,the cost driver (as the allocation base) for the same period in the,denominator,.,Advantage?,Accurate,Problem?,Lack,of timeliness, cost fluctuations over time,34,Actual vs. Normal (Predetermined) O/H Rate,Normal Costing Systems,We calculate the PDOH rate by:,Using the budgeted (predetermined) overhead costs for the budget period (usually a year) for the numerator,Use the budgeted,allocation,base for the same period in the denominator,Advantage?,more,timely product costing, less fluctuation in product/service costs over,time.,Problem?,Partly,actual and partly budgeted cost, therefore end of period adjustments.,35,Single or Multiple Predetermined Overhead Rates?,Companies can use:- a single overhead rate (plant-wide rate) OR- multiple rates (eg., one for each department), OR,- separate rates for each activity,(refer to ABC Lecture 5).,If multiple rates are used, then determine by,budgeted overhead cost & budgeted allocation base,for each department separately.,Allocation would then be as follows:,O/H allocated to Dept A = actual use of allocation base in Dept A * POHR for Dept A,O/H allocated to Dept B = Actual use of allocation base in Dept B * POHR for Dept B,and so on,36,4. End,of Period Adjustments,Focus:,under- and over-applied overhead,Three methods:,Adjusted,allocation rate,approach,Proration approaches,Immediate,write-off to Cost of Goods Sold approach,37,Overhead Application Example,Calvin Cos,actual,overhead for the year was $650,000 for a total of 170,000 direct labour hours.,How much total overhead was,applied,to,Calvin Cos,jobs during the year? Use,Calvin Cos,predetermined overhead rate of $4.00 per direct labour hour,38,SOLUTION,Applied Overhead = POHR Actual Direct Labour Hours,Applied Overhead = $4.00 per DLH 170,000 DLH,=,$680,000,Calvin Co,has,overapplied,overhead for the yearby $30,000. What will,Calvin,Co do?,End-Of-Period Adjustments,Underallocated indirect costs,occur when the,allocated,amount of indirect costs in an accounting period is,less than,the,actual,amount incurred,.,Overallocated indirect costs,occur when the,allocated,amount of indirect costs is,greater than,the,actual,amount incurred,.,Under,or overallocated indirect costs = Indirect costs,incurred, Indirect costs,allocated,Note: The following terms:,Underapplied,(or,overapplied,) indirect costs and,underabsorbed,(or,overabsorbed,) indirect costs are the same as,underallocated,(,or overallocated,).,39,Example Normal Costing,BJ Sports (BJs) manufactures various sporting equipments.,BJs is planning to sell a batch of 25 special machines (Job #100) to Healthy Gym,.,Costs,of Job #100:,Direct material = $45,000Direct manufacturing labour = $14,000,Machine hours is chosen as the allocation base for linking all indirect manufacturing costs to jobs.,Job #100 used 500 machine hours.,Assume that BJs budgets,$60,000,for total overhead costs and,2,400,machine hours.,What is the budgeted indirect-cost rate?,POHR,=,($60,000/2,400 MH) = $,25 per MH,40,How much indirect cost was allocated to Job #100?,500 machine hours $25 = $,12,500,What is the cost of Job #100 under normal costing?,Direct materials $45,000 Direct labour 14,000 Factory overheadallocated,12,500,Total$71,500,This is just,one of the jobs,BJs make during the year.,41,End-Of-Period Adjustments,Assume 2,480 machine hours were,actually used by,all jobs,for the,year,Assume the,total Manufacturing Overhead Cost for the year was,$65,100,How was the allocated overhead determined?,2,480 machine hours $25 budgeted rate =,$62,000,Under,or Over allocated,?,$,65,100 $62,000 = $3,100 (,under allocated,),Under,allocated,=,Under-costed,42,Quick Check 3: Tiger, Inc. had actual manufacturing overhead costs of $1,210,000 and a predetermined overhead rate of $4.00 per machine hour. Tiger, Inc. worked 290,000 machine hours during the period.,Tigers manufacturing overhead is,43,$50,000 overapplied,$50,000 underapplied,$60,000 overapplied,$60,000 underapplied,Approaches to disposing under-allocated or over-allocated overhead:,Adjusted allocation rate approach.,Immediate write-off to Cost of Goods,Sold approach.,3,Proration approaches.,44,Alternative 1:,A,djusted,Allocation Rate Approach,It,Re-states,all entries in the general and subsidiary ledgers by using,actual OH,rates rather than,budgeted OH rates,.,Actual indirect-cost rate is computed at the,end of the year,.,Every job to which indirect costs were allocated during the year has its amount recomputed.,45,Adjusted Allocation Rate Approach.,Re: BJs Example,Actual overhead,($65,100) exceeds,overhead allocated,($62,000) by 5%. (3,100 62,000 = 5%),BJs could increase the overhead allocated to,each job,by 5%.,Recall: Manufacturing overhead allocated to Job #100 under normal costing was $12,500.,A 5% increase = $12,500 1.,05,= $13,125 would be the actual cost of the job.,46,Alternatives,2 & 3:,Write off to cost of good sold,or,Prorate,If OH cost was $3,100 under applied:,47,Work inProcess,FinishedGoods,Cost of Goods Sold,$3,100may be,prorated,(,allocated),to these accounts,.,$3,100 may beclosed directly to,cost of goods sold,.,Cost of Goods Sold,OR,Immediate Write-off to Cost of,Goods Sold Approach (,BJs example,),Manufacturing Overhead 65,100 62,000 3,100,0,Cost of Goods Sold 71,500 3,100 74,600,48,What would be the difference if the overhead was over-allocated?,Alternative 3:Proration Approach,Proration is the spreading of under- or over-allocated overhead among,ending,Work in Process, Finished Goods, and Cost of Goods Sold balances.,Basis,to prorate under- or over-allocated overhead,:,Total amount of manufacturing overhead allocated,(before proration) in the accounts (WIP, FG & COGS),Ending balances,of the following A/Cs:,Work-in-Process, Finished Goods, and Cost of Goods Sold,49,Proration Approach “A”,Based on,manufacturing overhead allocated,components,included in each balances,:,Account,O/H,Alloc,Weighting,Prorate,($3100u),WIP,$,23,500,38%,$1,178,(Add or Subtract?),FG,26,000,42,%,1,302,COGS,12,500,20%,620,Total $62,000 100,%,3,100,(,underallocated,),50,Proration Approach “A”,Manufacturing Overhead Finished Goods,Control l65,100 62,000 Allocd 32,500 3,100 U/allocd,1,302,0 33,802,Cost of Goods Sold Work-in-Process,71,500 30,000,620,1,178,72,120 31,178,51,Under-allocated overhead is under-costed therefore the cost needs to be added to the accounts affected.,One account has been used here just to show you where the cost is going of course you should be using the 2 accounts for overhead),Proration Approach “B”,Based on,accounting balances,of Work-in-Process, Finished Goods, and Cost of Goods Sold (before proration,),Account,Ending Bal,Weighti,Prorate,($3100u),WIP,$30,000,22%,$ 682,(Add or Subtract?),FG,32,500,24%,744,COGS,71,500 54%,1,674,Total,$,134,000 100,%,3,100,52,Proration Approach “B”,Manufacturing Overhead Finished Goods,Control,65,100 62,000,Allocd,32,500 3,100,744,0 33,244 Cost of Goods Sold Work-in-Process,71,500 30,000,1,674,682,73,174 30,682,53,Choosing Among Approaches,Indirect-cost-allocated components,determine,the level of accuracy of inventory and cost of goods sold figures.,The adjusted allocation rate approach provides the most accurate record of individual job costs.,Approach A of proration is more accurate than approach B.,Immediate write-off approach is the simplest.,54,Lecture Example - Costumes Ltd.,A,Normal Job Costing System,is used in the manufacture of theatrical,costumes in its first month of operations (January 2012).,The company uses two departments: Department A for cutting; and Department B for,sewing,and packaging.Garments are made in batches by style numbers. The company uses single Control accounts (not departmental,).,Opening Balances in the accounts for the period were as follow:,Materials Control,(for DM & IM),$ 98,000,WIP,$,0,Finished Goods,$ 0,Overhead costs budgeted for the year ended 31 December 2012 are $175,000 for department A , and $120,000 for department B. Direct labour hours estimated for this year are 25,000 hours for department A and 30,000 hours for department B (Direct labour hours of the relevant department is used as the allocation base for each department).,55,During January one Job (Job #1) was started and completed with 500 units. In this month, 300 units were sold for $200 per unit.,Additional data for January 2012:,Required:,Calculate total cost and cost per unit Job #1.,Compute the under/over allocated manufacturing overhead and dispose this amount using write-off to COGS and proration based on ending balances in WIP, FG and COGS (even though this is normally done at the end of the year, for the purpose of this exercise, we can assume that this is done at the end of January).,56,A,B,Total,Direct material requisitioned,$15,000,$3,000,$18,000,Direct labour hours,1,000,1,200,2,200,Average rate direct labour hours,$6/hour,$8/hour,Indirect materials requisitioned,$500,$800,$1,300,Indirect labour cost,$3,200,$2,600,$5,800,Total factory expenses,$1,900,$1,200,$3,100,Next Lecture:,Activity Based Costing (ABC) Horngren et al. Chapter 5,Tutorial questions next week:,Horngren Ch 4,Questions: 4-1, 4-2, 4-6, 4-9, 4-11, 4-13 and 4-14,Exercises and Problems: 4-17, 4-31 and 4-34 (session 1),Optional activities for session 2 (please print from BB),Exercises and Problems: 4-19 and 4-21,57,