JOB ORIENTED ACCOUNTING

1
JOB ORIENTED ACCOUNTING

• Shop/Plant Focus by Job/project/order
• Resources frequently costed at
• Actual Direct Materials
• Actual Direct Labor
• Normalized Overhead Planned Overhead/Expected
  Units

2
Job 4307Water Pump for City of Lubbock
Shop 1 Shop 2 Totals
Direct Materials 60,000 10,000 600,000
Direct Labor 30,000 20,000 300,000
Overhead 30,000 20,000 300,000
Total 120,000 50,000 1,200,000
3
Process Costing

• Departmental Accounts
• Resources costed at average costs for products
  produced

4
Department Mix Crush
Direct Materials Direct Labor Overhead Total
Total Costs 12,000 4,000 22,000 38,000
Units 10,000 10,000 10,000 10,000
Unit Costs 0.12 0.04 0.22 0.38

• Focus is on managing the department
• Output of each department-Trans. In (like
  materials) from prior dept.
• Standardized products.

5
ACTIVITY ORIENTED ACCOUNTING

• Very similar to process accounting, except in
  allocations of overhead to product.
• Activity accounts

Direct Materials Direct Labor Activity Resources
200,000 100,000 200,000
6
Activity Resources

• Usually costed to products at something like

Activity Direct Materials Direct Labor Average Setup Average Overhead Total Cost
Make Parts 12.00 1.00 .50 .40 13.90
Assemble 2.00 2.00 1.00 5.00

• Focus on managing the activity
• --More complex allocation approach.

7
Types of Cost Systems

• ACTUAL VS. NORMAL (Average or planned)
• Actual Costing --Actual Mat., Labor, OH
• Normal Costing--Actual Mat., Labor, Average
  overhead
• Standard Costing--Planned Mat., Lab., OH
• COST BASIS
• Absorption Costing -Includes all costs of
  Production
• Variable Costing -Includes only variable
• COST ACCUMULATION
• Job Order--Unique products
• Process Costing--Large batches of common products
• Activity Costing--Like process but for activities