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Job Order Notes

The document outlines the differences between Job-Order and Process Costing, emphasizing that Job-Order is for customized products while Process Costing is for mass production. It details the calculation of the Predetermined Overhead Rate (POHR) and provides key journal entries for various costing activities. Additionally, it explains concepts like underapplied and overapplied overhead, direct materials used, cost of goods manufactured, and unit cost in Job-Order costing.

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4 views3 pages

Job Order Notes

The document outlines the differences between Job-Order and Process Costing, emphasizing that Job-Order is for customized products while Process Costing is for mass production. It details the calculation of the Predetermined Overhead Rate (POHR) and provides key journal entries for various costing activities. Additionally, it explains concepts like underapplied and overapplied overhead, direct materials used, cost of goods manufactured, and unit cost in Job-Order costing.

Uploaded by

keer.ashley.delacruz
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Job-Order Costing – Review Notes

1. Job-Order vs Process Costing

Job-Order Costing: Used when products/services are customized or unique. Costs are traced per
job.

Process Costing: Used when products are mass-produced and identical. Costs are averaged per
department.

Tip: Customized → Job-Order | Continuous production → Process

2. Predetermined Overhead Rate (POHR)

Formula: POHR = Estimated Manufacturing Overhead / Estimated Allocation Base

Allocation base examples: Machine-hours (MH), Direct labor-hours (DLH), Direct labor cost

Applied MOH: POHR × Actual Activity

3. Total Job Cost

Total Job Cost = Direct Materials + Direct Labor + Applied Manufacturing Overhead

4. Key Journal Entries

A. Purchase of Raw Materials

Dr Raw Materials

Cr Accounts Payable

B. Requisition of Materials

Direct Materials → Dr Work in Process (WIP) | Cr Raw Materials

Indirect Materials → Dr Manufacturing Overhead (MOH) | Cr Raw Materials

C. Labor Costs

Direct Labor → Dr WIP | Cr Wages Payable

Indirect Labor → Dr MOH | Cr Wages Payable

D. Other MOH Costs (Depreciation, Utilities, etc.)


Dr MOH

Cr Accumulated Depreciation / Cash / Payables

E. Applying Manufacturing Overhead

Dr WIP

Cr MOH

F. Completion of Job

Dr Finished Goods (FG)

Cr WIP

G. Sale of Job

1) Record Revenue → Dr Cash/AR | Cr Sales

2) Record Cost → Dr COGS | Cr FG

5. Underapplied vs Overapplied Overhead

Applied > Actual → Overapplied

Applied < Actual → Underapplied

Closing Entries:

Underapplied → Dr COGS | Cr MOH

Overapplied → Dr MOH | Cr COGS

6. Direct Materials Used

DM Used = Beg Raw Materials + Purchases − End Raw Materials − Indirect Materials

7. Cost of Goods Manufactured (COGM)

COGM = Beg WIP + Total Manufacturing Costs − End WIP

Total Manufacturing Costs = Direct Materials + Direct Labor + MOH Applied

8. Unit Cost (Job-Order)


Unit Cost = Total Job Cost / Units Produced

Memory Shortcuts

Direct Materials → Debit WIP

Indirect Materials → Debit MOH

Direct Labor → Debit WIP

Indirect Labor → Debit MOH

Apply Overhead → Debit WIP / Credit MOH

Job Finished → Debit FG / Credit WIP

Job Sold → Debit COGS / Credit FG

Underapplied → Debit COGS

Overapplied → Credit COGS

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