Scribd
Upload
61 views1 page

CH4 Job Costing Notes

This document discusses different approaches to job costing and allocating indirect costs, including actual costing and normal costing. Actual costing allocates indirect costs based on actual indirect cost rates times the actual quantities of the cost allocation base. Normal costing allocates indirect costs based on budgeted indirect cost rates times the actual quantities of the cost allocation base. Both methods allocate direct costs the same way, using actual direct cost rates times actual consumption. The document also introduces job costing and process costing systems, where the cost object is a distinct job or identical units of a product or service, respectively.

Uploaded by

Romel Bucaloy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
61 views1 page

CH4 Job Costing Notes

This document discusses different approaches to job costing and allocating indirect costs, including actual costing and normal costing. Actual costing allocates indirect costs based on actual indirect cost rates times the actual quantities of the cost allocation base. Normal costing allocates indirect costs based on budgeted indirect cost rates times the actual quantities of the cost allocation base. Both methods allocate direct costs the same way, using actual direct cost rates times actual consumption. The document also introduces job costing and process costing systems, where the cost object is a distinct job or identical units of a product or service, respectively.

Uploaded by

Romel Bucaloy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

CH4 Job Costing Notes Costing Approaches

Cost objects- are anything for which a cost ACTUAL COSTING – allocates indirect
measurement is desired. costs based on the actual indirect cost rates
times the actual quantities of the cost
Direct costs of a cost object- are costs that allocation base.
can be traced to that cost object in an
economically feasible way. NORMAL COSTING – allocates indirect
costs based on the budgeted indirect cost
Indirect costs of a cost object- are costs rates times the actual quantities of the cost
that cannot be traced in an economically allocation base.
feasible way.
Both methods allocate direct costs to a cost
Cost Pool – a grouping of individual object the same way – by using actual
indirect cost items. Cost pools simplify the direct cost rates times’ actual consumption.
allocation of indirect costs because the
costing system does not have to allocate
each cost individually.
Cost-allocation base – a systematic way to
link an indirect cost or group of indirect
costs to cost objects.
The concepts represented by these five
terms constitute the building blocks we will
use to design the costing systems described
in this chapter

Costing Systems
JOB COSTING SYSTEM- the cost object is a unit
or multiple units of a distinct product or service
which we call a job. Each job generally uses
different amounts of resources.

PROCESS COSTING SYSTEM- the cost object is


masses of identical or similar units of a product
or service. In this type of system, we divide the
total cost of producing an identical or similar
product or service by the total number of units
produced to obtain a per-unit cost.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy