Chapter 19, Problem 8BTN

To determine

1)

Introduction:

Job Costing

• Job Costing is a method of cost allocation and calculation used when the types of goods produced are specific in nature.

• The cost allocation is done for all products on basis of a specific cost estimate which is calculated by dividing the total costs for each process by the number of units produced.

• Job costing facilitates cost allocation in a simplistic manner based on the costs incurred specifically for certain units produced

Cost allocation of Overheads

• Cost allocation of Overheads takes place on basis of cost objects identified to enable cost allocation. Overheads refer to costs of operations and comprise of indirect costs in the form of selling and administrative expenses.

• Examples of Overheads are Salaries of administrative staff, rent of office, advertising expenses etc. The costs of the operations are allocated on basis of cost objects. Cost objects are units of cost allocation identified for overhead allocations and cost estimations.

• Examples of Cost objects for Overhead allocation are Number of units produced, number of labor hours worked etc.

To Determine:

Four items for direct materials and direct labor and cost allocation methodology.

To determine

2)

Introduction:

Job Costing

• Job Costing is a method of cost allocation and calculation used when the types of goods produced are specific in nature.

• The cost allocation is done for all products on basis of a specific cost estimate which is calculated by dividing the total costs for each process by the number of units produced.

• Job costing facilitates cost allocation in a simplistic manner based on the costs incurred specifically for certain units produced

Cost allocation of Overheads

• Cost allocation of Overheads takes place on basis of cost objects identified to enable cost allocation. Overheads refer to costs of operations and comprise of indirect costs in the form of selling and administrative expenses.

• Examples of Overheads are Salaries of administrative staff, rent of office, advertising expenses etc. The costs of the operations are allocated on basis of cost objects. Cost objects are units of cost allocation identified for overhead allocations and cost estimations.

• Examples of Cost objects for Overhead allocation are Number of units produced, number of labor hours worked etc.

To Determine:

Comparison of Job cost sheet with that of a Builder’s cost sheet