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Riwayadi
COST ACCUMULATION METHODS
1.Job order costing
2. Process costing
3. Hybrid costing or operation costing
This method is combination of job order costing and process
costing
4. Buckflush costing
This method is applied in the company that has applied the Just In Time (JIT)
concept. JIT is using PULL SYSTEM, NOT PUSH SYSTEMS. The
objective of JIT is to minimize inventory (zero inventory)This concept is
more detail discussed in operation management.
Hybrid costing and buckflush costing will be discussed in cost management
subject. In our cost accounting, we just discuss the job order and process
costing.
Cost Tracing
Process Backflush
Job Order Hybrid Costing Costing
Costing Costing
SUMMARY
Sales………………………………………………………………………….. xxx
Direct Material Costs…………………………………………… xxx
Direct Labor Costs……………………………………………… xxx
Factory Overhead Costs Applied …………………………… xxx
Cost of Goods Sold……………………………………………………………………. xxx
Gross profit….………………………………………………………………………….. xxx
Process Costing
Products produced are homogenous (Cement,
Coca Cola, etc.)
Products are produced to meet the market
Cost of products is calculated at the end of
accounting period
All manufacturing costs are assigned the
products using the actual costs.
Manufacturing costs are accumulated using
the production cost report.
DIFFERENCES BETWEEN JOB ORDER AND
PROCESS COSTING
Job Order Costing Process Costing
Operating Expense:
Marketing Expenses (xxx)
Administrative and General Expenses (xxx)
Total Operating Expenses (xxx)
Riwayadi
Products are Processed Through More Than One
Department
Cost of products are calculated for each department
WIP Inventory account are made for each departmnet
Units completed for Dept. I will be transferred to Dept. II
and the entry is as follows:
Work In Process Inventory – Dept. II…..… xx
Work In Process Inventory – Dept. I… xx
Products that have been completed at Departemen
III then are transferred to finished goods
warehouse using journal entry as follows:
Finished goods inventory ……… xx
Work In Process Inventory - Dept. III… xx
Exercise 2
Nice Bag Company produces customized school girl
nice bags. The bags are produced through 3
departments: Patterning, Cutting, and Tailoring.
Transactions for November 200X are as follows:
The company gets orders 50 units of Rupawan Bag,
100 units of Pesona Bag, 20 units of Menawan
Bag. The usage of direct raw materials were as
follows:
Patterning Tailoring Total
Job Order
Rupawan Rp 4.000.000 - Rp 4.000.000
Pesona “ 10.000.000 Rp 6.000.000 “ 16.000.000
Menawan “ 2.000.000 - “ 2.000.000
Total Rp 16.000.000 Rp 6.000.000 Rp 22.000.000
Direct labor costs were as follows:
Calculation:
Department Actual FOH Applied FOH Variance
Patterning Rp 7.800.000 Rp 7.000.000 Rp 800.000 UF
Cutting “ 10.100.000 “ 10.000.000 “ 100.000 UF
Tailoring “ 2.950.000 “ 2.500.000 “ 450.000 UF
6. To close FOH variance to cost of goods sold
Cost of Goods Sold…….………… 1.350.000
FOH Variance – Patterning Dept. ……… 800.000
FOH Variance – Cutting Dept.……….. 100.000
FOH Variance – Tailoring Dept.……….. 450.000
Job 1 Job 1
FOH
Assignment of
FOH to Job using
VBC
Cost Pool :
Plant / Producing Dept.
Unit driver
Job 01 Job 02
FOH
Assignment of
FOH to Job using
ABC
Cost Pool:
Activity
Job 01 Job 02
Exercise
volume- and activity-based job order costing
Job 1 Job 2
Quantities ordered 100 units 500 units
DRMC $ 500.000 $ 1.000.000
DLC 400.000 800.000
FOH activities:
no. of setups 40x 10x
no. of inspections 15x 5x
no. of orders 7x 3x
machine hours 100 400
Actual FOH cost was as follows:
Setup cost $ 300.000
Inspection cost $ 350.000
Purchasing cost $ 250.000
Required:
a. Determine cost per unit for each job using VBC
assuming the FOH rate is $ 2.000 per MH
b. Determine cost per unit for each job using ABC
assuming the FOH rate is as follows:
1)Setup rate $ 5.000 per setup 2) inspection rate $ 20.000
per inspection and 3) purchase rate $ 30.000 per order
c. Make journal entries needed using VBC and ABC