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ACCT 226 Week 2 Notes

by: Rachel Whitbeck

ACCT 226 Week 2 Notes ACCT 226 - 002

Rachel Whitbeck
GPA 4.0

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These notes cover what we talked about in class from Tuesday, January 26 to Thursday, January 28. Includes job order costing and flow of costs and journal entries using t-accounts.
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This 2 page Class Notes was uploaded by Rachel Whitbeck on Sunday January 31, 2016. The Class Notes belongs to ACCT 226 - 002 at University of South Carolina taught by Debbie Huguley Brumbaugh in Spring 2016. Since its upload, it has received 46 views. For similar materials see Introduction to Managerial Accounting in Accounting at University of South Carolina.


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Date Created: 01/31/16
ACCT 226 Notes- Week 2 Tuesday, January 26 , 2016  Job order costing- used by companies where many different products or services are produced each period o Capture costs associated with each individual job o Hospital example: patients are customers  You want a system to track what services each patient receives in order to give them different bills.  Example of overhead cost is utility bill. Not directly tied to a patient, but indirectly for the patients. o Absorption costing- apply all costs to the job o An example  Charge direct material and direct labor costs to each job as work is performed  Direct costs  Direct materials--> job 1, job 2, job 3  Direct labor--> job 1, job 2, job 3  Indirect costs  Manufacturing overhead--> job 1, job 2, job 3 o Job cost sheet  3 categories of direct materials, direct labor, and manufacturing overhead  Measuring direct materials  Includes job number and the specific product  Measuring direct labor  Includes time and employee name  Manufacturing overhead (MOH)- computing predetermined overhead rates, like depreciation or supervisor salary  Predetermined overhead rate (POHR) used to apply overhead to jobs is determined before the period begins  POHR= (estimated total manufacturing cost for the coming period) ÷ (estimated total units in the allocation base for the coming period) o Ideally, the allocation base is a cost driver that causes overhead o Four step process to compute POHR  Estimate base for next period’s production level  Estimate total FMOH and total VMOH/until for next period  Estimate total MOH costs for next period using the Y = a + bX  Compute POHR  Why use an allocation base? Thursday, January 28 , 2016  Review of last class o Total manufacturing costs o Tools used  Materials requisition form  Employee time ticket  Applied MOH o POHR= estimated total MOH/estimated activity  Flow of costs and journal entries and use of t-accounts o Review key terms from reading  Raw materials  Any materials that go into the final product.  When used in production, costs are transferred to the Work in Process inventory account as direct materials  Debit direct and indirect materials separately, then credit raw materials  Work in process  Units of product that are only partially complete and will require further work before they are ready for sale to the customer.  Labor costs are added directly and don’t flow through raw materials  Account that debits labor hours  Direct labor= work in process  Indirect labor= manufacturing overhead  Finished goods  Completed units of product that have not yet been sold to customers  Cost of goods manufactured  Includes the manufacturing costs associated with the goods that were finished during the period.  Amount transferred from Work in Process to Finished Goods o Total manufacturing cost= direct materials + direct labor + manufacturing overhead


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