1. Cost & Management Accounting Job order & Process costing Main Ahmad Farhan (FCA)

2. Examples Software house Textile Unit Job order costing Process costing

3. Concept Job order costing Concentrate or focus on specific job. Process costing Out put units should be homogenous.

4. Job Order Costing Process 1. Related to a customer specific order 2. Assigning a unique job code 3. Cost accumulation and preparing job order cost sheet

5. Job Order Cost Sheet CostJob 111-WJob 666-SJob 555-F Direct material cost Direct labor cost FOH applied Total production cost Selling & admin overhead Total cost charge to job Selling Price Profit/Loss Material Requisition Job time sheet Overhead absorption rate Predetermined rate

6. Example A furniture Mart received an order to manufacture furniture for a school the order was assigned a job code FS-6. FS-6 Job was priced at Rs. 4,00,000 and selling & Admin cost allocated to the FS-6 Job was 10% of selling price.

7. Direct Material Requisition Summary DateRequisition#Cost March 0597825,000 March 15106050,000 March 25110040,000 1,15,000

8. Direct Labor Time Sheet DateHoursRateAmount March 054005020,000 March 154005020,000 March 252005010,000 50,000

9. F.O.H Applied F.O.H cost is applied at Rs. 180 per Direct Labor hour. Direct Labor Hours = 400 + 400 + 200 = 1000 Direct Labor hors x O.A.R 1000 x 180 = 1,80,000

10. Job Order Cost Sheet Amount Direct Material Direct Labor F.O.H Total Production Cost + Selling & Admin overhead Total Cost -Selling Price Profit 115,000 50,000 180,000 345,000 40,000 3,85,000 4,00,000 15,000

11. Entries DateParticularsDebitCredit March 05 15 25 31 W.I.P (F-6) Material Payroll FOH Applied (400x180) W.I.P (F-6) Material Payroll FOH applied (400x180) W.I.P (FS-6) Material Payroll F.O.H applied (200x180) Cost of jobs completed (FS-6) Selling & Admin overhead 1,17,000 1,42,000 86,000 3,45,000 25,000 20,000 72,000 50,000 20,000 720,00 40,000 10,000 36,000 3,45,000

12. Entries DateParticularsDebitCredit March 31 31 Cost of jobs completed (F-6) Selling & Admin overhead Income statement Cost of jobs completed Accounts Receivable Sales Sales A/c To Income statement 40,000 3,85,000 4,00,000 40,000 3,85,000 4,00,000

13. W.I.P T- Account Date 05 March 15 25 Material 25,000 Payroll 20,000 FOH 72,000 Material 50,000 Payroll 20,000 FOH 72,000 Material 40,000 Payroll 10,000 FOH 36,000 Job completed A/c 3,45,000

14. Cost Of Job Completed A/c W.i.p 345,000 Selling & Admin 40,000 Balance 385,000