Saturday, January 22, 2011

Accumulating Costs Job-Order Costing System

Accumulating Costs in a Job-Order Costing System

In a typical job-order costing system, the costs of direct material, direct labor, and manufacturing overhead are assigned to each individual production job that is undertaken by the company.

These job order costs usually comprise the inputs of the product costing system.  When the company incurs costs to make a product, they are added to the Work-in-Process Inventory (WIP) account in the accounting general ledger.

To keep track of the manufacturing costs assigned to each job, a subsidiary ledger is maintained by an accountant

Job-cost sheet are used to accumulate the costs of direct material, direct labor, and manufacturing overhead assigned for a specific job. Other sections are used to record the total cost and average unit cost for the job.

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