Which of the following sequences describes cost flow in a job cost system
Learning Outcomes
Let’s go back to Mitchell Manufacturing. They just received a new job for two custom bikes that are identical. The team has met and they have made their materials list. Purchasing has created a materials requisition form and they are bringing in the components needed to build the bikes. Accounting has created a job cost sheet that will follow the bikes through from production to delivery. The flow of costs will look like: So where will they start on their job costing system? Let’s start at the beginning:
2. Set up the job costing sheet: This is where the numbers really start to come together. The job cost sheet includes a variety of information.
The paper trail through the production process is helpful to track all of your expenses in one place. This can be provided to the accounting department, who can then properly allocate all of the costs to a job. If you are a service business, most keep track of direct labor through a time tracking system, again, either manual or computerized. Companies use different systems based on their size and need. This example of tracking direct labor and materials follows an electrician through a job process. Each business is very different in the format that they use. Material requisition sheets, job tracking and numbering systems are all individual to the business. When you work as a manager the business you work for will introduce you to their system. The end result is the same, to find out how much it cost to produce the finished product for the job. As a reminder—this process is only used when there is more than one product being manufactured. Job costing would not be used at a plant that makes only one widget! Practice QuestionsContribute!Did you have an idea for improving this content? We’d love your input. Improve this pageLearn More |