1. Introduction to Job Costing

• Costing Systems: Understanding methods to measure cost associated with a product/service, crucial for decision-making.

2. Learning Objectives

• 4.1: Describe costing systems concepts.

• 4.2: Differences in job costing vs. process costing.

• 4.3: Outline the seven-step approach for job costing.

• 4.4: Understand actual vs. normal costing.

• 4.5: Track cost flow in job costing systems.

• 4.6: Dispose of under-/over-allocated MOH costs using alternative methods.

3. Basic Costing Terminology

• Cost Objects: Anything being measured for cost.

• Direct Costs: Easily traceable to a cost object.

• Indirect Costs: Not easily traceable to a specific cost object, grouped in pools.

4. Cost Terminology Expansion

• Cost Pool: Grouping of indirect costs.

• Cost-allocation Base: Method to link indirect costs to cost objects.

• Building Blocks: Key concepts that form the basis for costing systems.

5. Cost Assignment Review

• Direct Costs (Cost A): Affect cost objects directly.

• Indirect Costs (Cost B): Collected in cost pools, allocated to cost objects (Cost C).

6. Two Costing Systems

6.1 Job Costing

• Deals with distinct products/services, each job uses varying resources.

6.2 Process Costing

• Mass production of identical units, costs are averaged over units produced.

7. Costing Systems in Different Sectors

• Examples across service (audit), merchandising (Home Depot), and manufacturing (Boeing) sectors illustrating various applications of costing.

8. Costing Approaches

8.1 Actual Costing

• Uses actual rates for overhead applied based on actual quantity of cost allocation base.

8.2 Normal Costing

• Uses budgeted rates for overhead, applied based on actual quantity.

9. Indirect Cost Rate Calculation

• Actual Rate: Actual overhead costs divided by actual quantity of allocation base.

• Budgeted Rate: Budgeted overhead costs divided by budgeted quantity of allocation base.

10. Summary of Costing Approaches

• Both costing methods trace direct costs the same way but differ in indirect cost handling.

11. Seven-Step Approach to Job Costing

11.1 Step 1-4

• Identify the job, direct costs, allocation bases, and indirect costs.

11.2 Step 5-7

• Compute rates per unit for allocation, calculate allocated indirect costs, and total job costs.

12. Example Job Costing Process

• Demonstrates steps in calculating total job costs using direct materials/labor and overhead allocation.

13. Cost Flow Process in Job Costing

13.1 Income Statement

• Outlines revenues, direct materials, labor, manufacturing overhead, cost of goods sold.

13.2 Balance Sheet

• Consideration of inventories and marketing expense allocations.

14. Journal Entries in Job Costing

14.1 Overview of Journal Entries

• Captures every transaction in the production process.

14.2 Detailed Journal Entries

• Specific actions taken (e.g., purchasing materials, recognizing labor costs, applying overhead).

15. Accounting for Overhead

15.1 Imbalances and Adjustments

• Explains actual overhead versus allocated overhead and approaches to reconcile differences.

15.2 Methods of Adjustment

• Adjusted allocation rate, proration, and write-off approaches to deal with imbalances in overhead accounts.

16. Job Costing in the Service Sector

• Applications of job costing methodologies outside manufacturing, e.g., accounting services, auto repairs.

17. Conclusion

• Summary of essential job costing principles and applications to reinforce learning.

18. Homework and Continuing Studies

• Assignment and review of concepts covered.