Job Costing Flashcards
Job costing
Used where many different products, orders or series of products are produced in every period
Examples
Job costing
- Advertising comany
- Medical pratice
- Legal practice
Process costing
Used where masses of homogenous products (of the same nature/kind) are produced
Examples
Process costing
- Mill
- Soft drink manufacturer
Just-in-time system
Simplifies entries in Accounting System
Reduces risk of obsolete inventory
POSITIVE impact on storage costs
Just-in-time system
Storage costs are lower meaning we don’t have to store as much inventory
Negative side
Just-in-time system
Supplier may not have sufficient inventory or may not deliver
Cost of Goods Manufactured (CoGM)
Absorption cost assigns Fixed MOH -> CoMP (Cost of Manufactured Products), where FC as Period Cost as VC Calc
Calculation of CoGM
Calc RM use by:
1. Opening Bal + Purchases - Closing Bal
2. MC + DLC
3. = Primary Cost
4. + MOH (Actual or Allocated depending on info)
5. = Total Manufacturing Cost
6. + WIP (Opening Bal)
7. - WIP (Closing Bal)
8. = CoGM or CoGC
Cost of Goods Sold (CoGS)
Will be actual CoGS when actual MOH is + to Primary Cost = Total Manufacturing Cost
Framework
Cost of Goods Sold
- Cost of Goods Manufactured
- Finished Goods opening bal
- Finished Goods closing bal
- = Cost of Goods Sold
