PRODUCT COSTING AND COST ACCUMULATION IN A BATCH PRODUCTION ENVIRONMENT
CHAPTER 3 BRIEF SUMMARY
PRODUCT COSTING AND COST ACCUMULATION IN A
BATCH PRODUCTION ENVIRONMENT
Learning Objectives
1. Discuss the role of product and service costing in manufacturing and nonmanufacturing firms.
2. Diagram and explain the flow of costs through the manufacturing accounts used in product costing.
3. Distinguish between job-order costing and process costing.
4. Compute a predetermined overhead rate, and explain its use in job-order costing for job-shop and batch-production environments.
5. Prepare journal entries to record the costs of direct material, direct labor, and manufacturing overhead in a job-order costing system.
6. Prepare a schedule of cost of goods manufactured, a schedule of cost of goods sold, and an income statement for a manufacturer.
7. Describe the two-stage allocation process used to compute departmental overhead rates.
8. Describe the process of project costing used in service industry firms and nonprofit organizations.
Chapter Overview
I. Product and Service Costing
A. Use in financial accounting
B. Use in managerial accounting
C. Use in cost management
D. Use in reporting
II. Flow of Costs in Manufacturing Firms
A. Work-in-process inventory
B. Finished-goods inventory
C. Cost of goods sold
III. Types of Product-Costing Systems
A. Job-order costing systems
B. Process-costing systems
IV. Job-Order Cost Accumulation
A. Job-cost record
B. Direct materials
C. Direct labor
D. Manufacturing overhead
V. Overhead Application
A. Terminology and application steps
B. Incurrence of actual overhead
C. Adjusting the over- or underapplied overhead at the end of the accounting period
VI. Extended Illustration of Job-Order Costing: Calculations and Journal Entries
VII. Financial Schedules
A. Schedule of cost of goods manufactured
B. Schedule of cost of goods sold
VIII. Further Aspects of Overhead Application
A. Actual and
PRODUCT COSTING AND COST ACCUMULATION IN A
BATCH PRODUCTION ENVIRONMENT
Learning Objectives
1. Discuss the role of product and service costing in manufacturing and nonmanufacturing firms.
2. Diagram and explain the flow of costs through the manufacturing accounts used in product costing.
3. Distinguish between job-order costing and process costing.
4. Compute a predetermined overhead rate, and explain its use in job-order costing for job-shop and batch-production environments.
5. Prepare journal entries to record the costs of direct material, direct labor, and manufacturing overhead in a job-order costing system.
6. Prepare a schedule of cost of goods manufactured, a schedule of cost of goods sold, and an income statement for a manufacturer.
7. Describe the two-stage allocation process used to compute departmental overhead rates.
8. Describe the process of project costing used in service industry firms and nonprofit organizations.
Chapter Overview
I. Product and Service Costing
A. Use in financial accounting
B. Use in managerial accounting
C. Use in cost management
D. Use in reporting
II. Flow of Costs in Manufacturing Firms
A. Work-in-process inventory
B. Finished-goods inventory
C. Cost of goods sold
III. Types of Product-Costing Systems
A. Job-order costing systems
B. Process-costing systems
IV. Job-Order Cost Accumulation
A. Job-cost record
B. Direct materials
C. Direct labor
D. Manufacturing overhead
V. Overhead Application
A. Terminology and application steps
B. Incurrence of actual overhead
C. Adjusting the over- or underapplied overhead at the end of the accounting period
VI. Extended Illustration of Job-Order Costing: Calculations and Journal Entries
VII. Financial Schedules
A. Schedule of cost of goods manufactured
B. Schedule of cost of goods sold
VIII. Further Aspects of Overhead Application
A. Actual and