- Describe cost classifications and their importance.
- Explain the differences in financial statements for a manufacturing company versus a merchandising company.
- List the cost flow process for a manufacturing company.
- Compare a job cost system and process cost system and explain when each would be used.
- Describe the cost flows in a job cost system.
- List and describe documents used in a job cost system.
- Explain the concept of overhead and how it is used.
- Calculate the predetermined overhead rate.
- Allocate overhead to job using estimates.
- Enter journal entries to record finished jobs and for the sale of jobs.
- List and define key terms related to a job cost system.
Job cost system – Managerial Accounting
We will start by introducing managerial accounting or cost accounting topics that apply to companies that manufacture using either a job cost system or a process cost system.
The course will describe classifications for costs and the importance of being able to classify costs in different ways.
We will list and describe an outline of the process costs go through as they flow through the accounting process in a manufacturing company.
The course will compare the two major systems used to track inventory costs in a manufacturing company, the job cost system, and the process costs system. We will discuss when a company would use either a job cost system or a process cost system.
We will discuss the flow of inventory costs in a job cost system and track the process of costs related to raw materials, that then flow to work in process and factory overhead, to finished goods, and finally, are expensed in the form of cost of goods sold.
The course will list and describe key documents in the job cost system, documents that facilitate and help record the flow of costs in the system.
We will explain the concept of overhead and why it is needed, including the concept of actual overhead incurred and estimated overhead we apply to jobs. The course will show how to calculate the predetermined overhead rate and how to use this rate to estimate overhead allocated to jobs.
The course will record the journal entries related to costs as they flow through the job cost system including journal entries for the transfer of raw materials to work in process and factory overhead, the incurrence of direct and indirect wages, and other overhead costs. We will enter journal entries to allocate overhead to work in process and to close out finished jobs from work in process to finished goods. We will also enter journal entries to record the sale and related costs of finished jobs.