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chapter 19
Job Costing
and Modern Cost Management Systems
goals discussion
goals
achievement
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multiple
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check list and key terms
Following is a "checklist" of selected key concepts that are likely to be included on an exam. Review and check-off each noted item to be certain that important concepts have not been overlooked in your study.
Describe the approach to accumulating product cost using a job costing system.
Develop an illustration that portrays the typical content of a job cost sheet.
Identify the purpose of a materials requisition.
What is a database system, and how does it facilitate job costing mechanics?
What are some of the influences of technology on job costing data capture?
Be able to prepare journal entries to record direct and indirect materials and labor.
Discuss the issues and problems associated with accounting for factory overhead.
How is an overhead application rate calculated, and how is it applied?
How is actual overhead cost accumulated?
Describe the basic content of the Factory Overhead account.
Prepare typical entries related to the completion and sale of a manufactured product.
Explain why Work in Process is actually a control account.
What is meant by over- and underapplied overhead, and how do such amounts emerge from within the accounting system?
Define "cost driver."
In a modern manufacturing environment, why might traditional cost drivers produce misleading results?
What is meant by capacity utilization, and how does this influence costing allocations for service, not-for-profit, and governmental entities.
Is job costing only applicable to manufacturing businesses?
Describe some of the influences of globalization on issues relating to modern cost management.
What is the concept of of Kaizen?
Know the difference between cutting costs and developing lean organization.
Explain just in time inventory management.
Be able to discuss quality management concepts, like TQM, ISO 9000, and Six Sigma.
What is the management accountants role in quality management?
KEY TERMS AND DEFINITIONS (with links to discussion in text)
| capacity utilization | The degree to which an organization's output capabilities are being deployed or utilized |
| cost driver | The factor that is viewed as causing costs to be incurred within an organization |
| database | An information storehouse, usually electronic, that can be queried to extract data meeting certain parameters. Enables singular data entry and multiple data output. |
| direct costs | A cost easily traced to a specific job; generally direct material and direct labor |
| indirect costs | A cost not easily traced to a specific job; generally categorized as factory or manufacturing overhead |
| job cost sheet | A document representing a compilation of cost data for a specific job |
| just in time inventory | Raw materials are received from supplies just as they are needed in the production process |
| Kaizen | Japanese term used to describe a blitz like approach to study processes and install efficiency within an organization |
| Kanban | Japanese term which means some form of signal that a particular inventory is ready for replenishment |
| lean manufacturing | Indicative of an environment where waste has been trimmed; entails a focus on standardization, speed, and quality, without compromising responsiveness to customer demand |
| materials requisition form | Form showing what material has been removed from the raw materials stock and put into production |
| overapplied overhead | Applied overhead exceeds the actual amount; usually viewed as a favorable outcome, because less has spent than anticipated for the level of achieved production |
| overhead application rate | A rate used to apply manufacturing overhead to output; estimated factory overhead for a period divided by the estimated application base |
| Six Sigma | A trademarked quality management system developed by Motorola; driven by pursuit of statistical results that reflect near perfection in production and processing |
| transfer pricing | The system of setting prices at which goods are exchanged between affiliated units; usually involving cross-border transactions |
| underapplied overhead | Applied overhead is less than the actual amount; usually viewed as a unfavorable outcome, because more has spent than anticipated for the level of achieved production |