5. Job Order Costing:
Job order costing or job costing is a system for assigning
manufacturing costs to an individual product or batches of products. Generally,
the job order costing system is used only when the products manufactured are
sufficiently different from each other.
Process Costing:
Process costing is a term used in cost accounting to describe one method for
collecting and assigning manufacturing costs to the units produced. Processing
cost is used when nearly identical units are mass produced.
6. •Both systems assign material, labor, and
overhead costs to products and they provide
a mechanism for computing unit product
costs.
• Both systems use the same manufacturing
accounts, including Manufacturing Overhead,
Raw Materials, Work in Process, and Finished
Goods.
• The flow of costs through the manufacturing
accounts is basically the same in both
systems.
Similarities Between Job-Order and Process Costing
8. Differences Between Job-Order and Process Costing
Process costing:
Job Order Costing Process costing
1. Many different jobs are worked
on during each period, with
each job having different
production requirements.
1. A single product is produced
either on a continuous basis or
for long periods of time. All
units of products are identical.
2. Costs are accumulated by
individual job.
2. Costs are accumulated by
department.
3. Unit costs are computed by job
on the job cost sheet.
3. Unit costs are computed by
department.
12. ***
***
***
***
***
***
***
***
***
• Calculation of Equivalent units of Production:
Unit Completed
transferred to the next
department
+
% of completion of ending
w/p in total EU
Material Labor Manufacturing
Overhead
13. • Calculation of Cost per EU:
Material
***
***
***
***
***
Labor
***
***
***
***
***
Manufacturing
Overhead
***
***
***
***
***
Cost of Beginning Inventory
+
Cost Added during
Production
a) Total Cost
a) Equivalent Unit of
production
c) Cost per Equivalent
unit (a/b)
16. Question -1:
Superior micro Products uses the weighted average method in its process costing system. Data for the
Assembly Department for May appear below-
Materials Labor Overhead
Work in process
, May1
18000 5500 27500
Cost added
during May
238900 80300 401500
Equivalent units
of production
35000 33000 33000
1) Compute the cost per Equivalent unit for materials, labor and overhead
2) Compute the total cost per equivalent whole unit
19. Question-2
Helix corporation produces prefabricated flooring in a series of steps carried out in
production departments. All of the material that is used in the first production
department is added at the beginning of processing in that department. Data for May
for the first production department follow-
units materials Conversion
Work in process
inventory, May 1
5000 100% 40%
Work in process
inventory, May 31
10000 100% 30%
20. Materials cost in work in process
inventory, May 1
1500
Conversion cost in work in process
inventory, May 1
4000
Units started into production 180000
Units transferred to the next
production department
175000
Materials cost added during may 54000
Conversion cost added during may 352000
1) Prepare a cost reconciliation report for the month
22. Question-3
Builder’s products, manufactures a caulking compound that goes through three processing stages prior to
completion. Information on work in the first department, cooking, is given below for may :
Pounds in process, may 1; materials
100 % complete ; conversion 80%
complete
10000
Pounds started into production
during may
100000
Pounds completed and transferred
out
?
Pounds in process, may 31,
materials 60% complete, conversion
20% complete
15000
Production Data:
23. Cost data:
Work in Process Inventory, May 1
Material Cost 1500
Conversion Cost 7200
Cost Added during May:
Material Cost 154500
Conversion Cost 90800
1) Prepare a cost reconciliation report for the month.
26. Question-4
Luxguard HomePaint Company produces exterior latex paint, which it sells in one gallon containers. The
company has two processing departments-base FAB and Finishing. White paint, which is used as a base
for all the company’s paints, is mixed from raw ingredients in the base-Fab department. Pigments are then
added to the basic white paint, the pigmented paint is squirted under pressure into one gallon containers,
and the containers are labeled and packed for shipping in the finishing departments. Information relating to
the company’s operations for April follows-
a) Issued raw materials for used in productions : base fab department , 851000 and finishing department,
629000
b) Incurred direct labor costs: : base fab department , 333000 and finishing department, 270000
c) applied manufacturing overhead cost: : base fab department , 665000 and finishing department,
405000
d) transferred basic white paint from the base fab department to the finishing dept.
e) transferred paint that had been prepared for shipping from the finishing dept to finished goods
3200000
REQUIREMENT:
1) Prepare journal entries to record items a) through e) above
2) Prepare a cost reconciliation report for april
27. Requirement-1:
a) Base Fab Dept: W/P – Dr – 851000
Finished Dept : W/P – Dr - 629000
Raw Materials -Cr - 1480000
b) Base Fab Dept: W/P – Dr – 330000
Finished Dept : W/P – Dr - 270000
Salaries & wages payable- Cr - 600000
c) Base Fab Dept: W/P – Dr – 665000
Finished Dept : W/P – Dr - 405000
Manufacturing Overhead-- Cr-- 1070000
d) Finished Dept : W/P – Dr -- 1850000
Base Fab Dept: W/P – Cr – 1850000
e) Finished Goods – Dr– 3200000
Finished Dept: W/P –Cr-- 3200000
29. Question 5
Quality brick company produces bricks in two processing dept-Molding and Firing. Information relating
to the company’s operations in march follows:
a) Raw materials were issued for use in production: molding dept 23000 and firing dept 8000
b) Direct Labor cost were incurred : molding dept 12000 and firing dept 7000
c) Manufacturing overhead was applied: molding dept 25000 and firing dept 37000
d) Unfired, molded bricks were transferred from the molding dept to the firing dept. according to the
company’s process costing system the cost of the unfired molded bricks was 57000
e) Finished bricks were transferred from the firing dept to the finished goods warehouse. According
to the company’s process costing system, the cost of the finished bricks was 103000.
f) Finished bricks were sold to customers. . According to the company’s process costing system, the
cost of the finished bricks sold was 101000.
Requirement:
1) Prepare journal entries to record items (a) through (f) above.
30. Requirement 1
a) Molding Dept: W/P – Dr – 23000
Firing Dept : W/P – Dr - 8000
Raw Materials -- Cr -- 31000
b) Molding Dept: W/P – Dr – 12000
Firing Dept : W/P – Dr - 7000
wages payable -- Cr - 19000
c) Molding Dept: W/P – Dr – 25000
Firing Dept : W/P – Dr - 37000
Manufacturing Overhead -- Cr-- 62000
d) Firing Dept : W/P -- Dr--57000
Molding Dept: W/P – Cr-- 57000
e) Finished Goods --Dr– 103000
Firing Dept : W/P --Cr-- 103000
f) COGS --Dr-- 101000
Finished Goods --Cr-- 101000
