ACC 350 Week 4 Discussion

Hello Professor Asher and classmates,

Job-order costing is a costing system used in situations where many different products, jobs, or services are produced each period.

Manufacturing companies using a job-order costing system usually receive orders for customized products and services.

The basic flow of costs in a job-order costing system begins by recording the costs of direct materials, direct labor, and overhead manufacturing overhead.

Direct material and direct labor costs are debited to the Work In Process account. Any indirect material or indirect labor costs are debited to the Manufacturing Overhead control account, along with any other actual manufacturing overhead costs incurred during the period. Manufacturing overhead is applied to Work In Process using the predetermined rate. The offsetting credit entry is to the Manufacturing Overhead control account. An example of this would be: At the beginning of 2019 Hyundai Manufacturing company estimated that 160,000 machine hours would be worked and $920,000 overhead cost would be incurred. The balances of raw materials, work in process and finished goods were as follows:

• Raw Materials: $50,000 • Work in process: $40,000 • Finished goods: $70,000

The T-account of the job-order costing system would be as follows: Raw Materials

Balance: $50,000 Work In Process

Balance: $40,000 Finished Goods

Balance: $70,000 The journal entry would include all of the transactions that were accrued by Hyundai Manufacturing company during the year of 2019. Along with those journal entries, the T-accounts would reflect an ending balance for all of the following transactions throughout the year. Source: Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018) Managerial Accounting (16th ed.). Boston, MA:McGraw- Hill. https://strayer.vitalsource.com/#/books/9781259995484/cfi/6/26!/4/2/30/34/24/4@0:30.0