Chapter 20 - Job Order Costing

Flashcards covering key vocabulary and concepts related to job order costing as presented in Accounting Principles, Thirteenth Edition.

Cost Accounting

Involves measuring, recording, and reporting product costs and are fully integrated into the general ledger using a perpetual inventory system.

Process Cost System

Used for large volumes of similar products where costs are accumulated for a time period and assigned to departments or processes.

Job Order Cost System

Costs are assigned to each job or batch, each with distinguishing characteristics, to compute the cost per job.

Job Order Cost Flow

Manufacturing costs are assigned to the Work in Process (WIP) Inventory account and the cost of completed jobs is transferred to the Finished Goods Inventory account

Raw Material Costs

Recorded by debiting Raw Materials Inventory and crediting Accounts Payable.

Factory Labor Costs

Include wages payable, employer payroll taxes, and fringe benefits.

Manufacturing Overhead Costs

Include costs like property taxes, depreciation, insurance, and repairs related to the manufacturing process.

Job Cost Sheet

Used to record costs chargeable to specific jobs. It is a subsidiary ledger for the Work in Process Inventory account.

Materials Requisition Slip

Written authorization for issuing raw materials, either as direct materials (charged to Work in Process Inventory) or indirect materials (charged to Manufacturing Overhead).

Time Tickets

Used to assign labor costs to jobs, indicating the employee, hours worked, account and job charged, and total labor cost.

Predetermined Overhead Rate

Based on the relationship between estimated annual overhead costs and expected annual operating activity.

Underapplied Overhead

A debit balance in manufacturing overhead, adjusted by debiting Cost of Goods Sold.

Overapplied Overhead

A credit balance in manufacturing overhead, adjusted by crediting Cost of Goods Sold.