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					JOB COSTING SYSTEM

    Presented by: GROUP # 5
       Michael A. Aceves
          Kiet T. Diep
         Alan E. French
         Shasha Guan
          Noela Ieong
          Sara Zarineh
Job Costing System
 a Job is an individual product or batch for
  which a company needs cost information.
 Companies that produce individual
  products or batches of products that are
  unique use a job costing system.
 Example : Boeing Company
JOB COSTING SYSTEM




  Time Card               Data entry                      Production                                      To
   or Labor                   and                            labor                                       Payroll
    Ticket                verification                    transaction
                                                              file
                                                                                       Merge



  Materials               Data entry                       Materials                      2
  requistion                  and                           issuance
                          verification                    transaction
                                                               file

                                                                                                                   Materials and
                                                                                                 3                 labor usage
                                                                                                                      report
                                                           Production
                                                               cost                      Print
                                                         transaction file                                          Scrap and lost
                                                             (Actual)                                               time report



                                                                                   4
                                    Manufacturing                          Cost
                                    Overhead file                       distribution
           Overhead
            residual                  (Actual)
           analysis                                                                                                        Job
                                                                                                                          status
                               5                                                                                          query

                                         Overhead
                                         application                    Open Job                                         Job status
                                                                                                 Print
                                                                          file                                             report
                                                                         (WIP)
                                                                                                            6


          Standard cost
            variance
            analysis                        Standard
                                             cost file
                                           (Budgeted)
   7
          Standard cost
            variance
             reports
Symbols means…

           A document or report: the document
            may be prepared by hand or printed by
            a computer.


           The online keying: data entry by online
            devices such as a terminal or personal
            computer.

           Magnetic disk: data stored permanently
            on a magnetic disk; used for master
            files and databases.
Continuous…
         Off-page connector: An entry from, or an exit to,
          another page.


         Computer processing: A computer-performed
          processing function; usually results in a change
          in data or information.


         Display: Information displayed by an online
          output devise such as a terminal, monitor, or
          screen.


         Auxiliary operation: A processing function done
          by a device that is not a computer.
   Time Card           Data entry           Production                          To
    or Labor               and                 labor                           Payroll
     Ticket            verification         transaction
                                                file

                                                                 Merge




   Materials           Data entry            Materials
   requistion              and                issuance
                       verification         transaction
                                                 file




Section 1:
Direct Labor Cost
   The document which is used to trace direct labor cost to production is called a time
    ticket. The time ticket indicates how much time was spent on which job by which
    employee. Note that when several employees all work on the same job, the time
    card data will be aggregated and then applied to each job.

Direct Material Cost
   The document used to request the release of materials to production is called a
    materials requisition. This requisition indicates the type, quantity and cost of
    material as well as the job number to which it will be assigned.
                                   Merge



                                      2



                                                         Materials and
                                                         labor usage
                                             3
                                                            report

            Production
                cost                 Print
            transaction                                  Scrap and lost
                 file                                     time report
              (Actual)



   The Production labor transaction file contains payroll information
    (information from the time cards or labor tickets).
   The Materials issuance transaction file is made up of information
    from materials that are requested and ordered.
   In step 2, the Production labor transaction file, and the Materials
    issuance transaction files are merged, to create the Production
    cost transaction file. The information in the Production cost
    transaction file is based on actual cost and not estimated cost.
                                    Merge



                                        2



                                                           Materials and
                                                           labor usage
                                               3
                                                              report

            Production
                cost                   Print
            transaction                                    Scrap and lost
                 file                                       time report
              (Actual)




   The costs from the actual production cost transaction file are printed and
    displayed as information on two separate documents. These documents
    are (1) the materials and labor usage report, and (2) the scrap and lost
    time report.
   These reports will give its reader (probably a supervisor or someone in a
    managerial capacity) an idea of what materials were used, how much
    labor was used, the amount of scrap that came out of the project during
    its construction, and the amount of time lost during the building phase.
    Also, the scrap and lost time report should say why time was lost, how
    much was lost, and why there was scrap material.
                                                                                  Section 4:
                                                                                  The computer accesses
                                Production                                        the production cost
                                    cost                                          transaction file, which
                                transaction
                                     file
                                                                                  includes all production
                                  (Actual)                                        costs, and distributes
                                                                                  the costs amongst the
                                                    4                             manufacturing overhead
                                                                                  file and the open-job
                Manufacturing                Cost                                 file.
                Overhead file             distribution
Overhead
                  (Actual)
 residual
analysis
                                                                     Job status
                                                                       query
            5

                 Overhead
                 application              Open Job                   Job status
                                                         Print
                                            file                       report
                                           (WIP)
                                                                 6
                                                                                  Section 5:
                                                                                  Manufacturing
                                Production                                        Overhead File:
                                    cost                                          Includes all costs
                                transaction
                                     file
                                                                                  necessary for the
                                  (Actual)                                        production of goods, but
                                                                                  which cannot be tied to
                                                    4                             specific goods
                                                                                  themselves. This
                Manufacturing                Cost                                 includes indirect labor,
                Overhead file             distribution
Overhead                                                                          indirect materials,
                  (Actual)
 residual                                                                         property tax, insurance,
analysis
                                                                     Job status   heat and light.
                                                                       query      Determining of factory
            5
                                                                                  overhead costs is more
                                                                                  complicated because
                 Overhead
                 application              Open Job                   Job status   the cost accountant
                                                         Print
                                            file                       report     cannot calculate total
                                           (WIP)                                  actual factory overhead
                                                                 6                costs for an accounting
                                                                                  period until it ends.
                                    Production
                                        cost
                                    transaction
                                         file
                                      (Actual)


                                                        4
                    Manufacturing                Cost
                    Overhead file             distribution
   Overhead
                      (Actual)
    residual
   analysis
                                                                          Job status
                                                                            query
                5

                     Overhead
                     application              Open Job                     Job status
                                                             Print
                                                file                         report
                                               (WIP)
                                                                     6

Applied overhead is the amount of overhead assigned to WIP as a result of incurring
the activity that was used to develop the application rate. Application is made using the
predetermined rates and the actual level of activity.
Overhead Analysis: Analyzing the individual overhead cost factors will show all cost
factors in terms of the fixed and variable values. Such a detailed analysis can be
summed and restated as a total cost flexible budget formula that would allow total costs
at all activity levels to be computed.

                                    Production
                                        cost
                                    transaction
                                         file
                                      (Actual)


                                                        4
                    Manufacturing                Cost
                    Overhead file             distribution
  Overhead
                      (Actual)
   residual
  analysis
                                                                            Job status
                                                                              query
                5

                     Overhead
                     application              Open Job                      Job status
                                                             Print
                                                file                          report
                                               (WIP)
                                                                     6
                                Production
                                    cost
                                transaction
                                     file
                                  (Actual)                                           Section 6: The files from
                                                                                      the open job file (working
                                                    4
                                                                                      in progress) database
                Manufacturing
                Overhead file
                                             Cost
                                          distribution
                                                                                      can be displayed or
Overhead
 residual
                  (Actual)                                                            accessed on an online
analysis
                                                                     Job status       output devise such as a
                                                                       query
            5                                                                         terminal, monitor, or
                                                                                      screen through job status
                 Overhead
                 application              Open Job                   Job status       query. Also, the files from
                                                         Print
                                            file
                                           (WIP)
                                                                       report         the open job file database
                                                                 6                    can be printed which will
                                                                                      produce a document
                                                                                      called job status report,
                                                Production cost
                                                transaction file
                                                    (Actual)




   Section 7: The actual
    production cost
    transaction files database
    and budgeted standard
    cost file database are                                   Overhead
                                                             application

    both accessed in order to
    perform standard cost
    variance analysis, which         Standard

    is a process in order to           cost
                                     variance                       Standard
                                                                     cost file
                                     analysis
    produce a document           7
                                                                   (Budgeted)



    called standard cost             Standard
                                        cost

    variance reports. The            variance
                                      reports

    standard cost file
Using Variance Analysis to Control
             Costs
Compute Variance


    Is the Variance Result
                                  No
                                               No Corrective Action Needed
          Significant?
                  Yes
       Determine Cause(s) of Variance



             Identify, and Analysis Performance
              Measures to Determine Corrective
                            Action


                             Take Corrective Action
JOB COSTING SYSTEM




  Time Card               Data entry                      Production                                      To
   or Labor                   and                            labor                                       Payroll
    Ticket                verification                    transaction
                                                              file
                                                                                       Merge



  Materials               Data entry                       Materials                      2
  requistion                  and                           issuance
                          verification                    transaction
                                                               file

                                                                                                                   Materials and
                                                                                                 3                 labor usage
                                                                                                                      report
                                                           Production
                                                               cost                      Print
                                                         transaction file                                          Scrap and lost
                                                             (Actual)                                               time report



                                                                                   4
                                    Manufacturing                          Cost
                                    Overhead file                       distribution
           Overhead
            residual                  (Actual)
           analysis                                                                                                        Job
                                                                                                                          status
                               5                                                                                          query

                                         Overhead
                                         application                    Open Job                                         Job status
                                                                                                 Print
                                                                          file                                             report
                                                                         (WIP)
                                                                                                            6


          Standard cost
            variance
            analysis                        Standard
                                             cost file
                                           (Budgeted)
   7
          Standard cost
            variance
             reports
    Conditions can lead to improper job costing:


 Misstating the stage of completion.
 Charging costs to the wrong Job.
 Misrepresenting the cost of jobs.
 Intentional misrepresentation in contracts
Ways to improve inventory subprocess
     Barcodes: is a pattern of parallel bars and spaces carrying information in
      the relative widths of these features. Bar codes represent data in a
      machine-readable form, and are one of the most efficient means of
      capturing data automatically.
     Real Time Locating System (RTLS): uses battery-operated radio tags
      that lasts 5 years and a cellular locating system to detect the presence and
      location of the tags anywhere from 50 to 1000 ft
     Acousto-Magnetic (AM) tags: small, self adhesive labels with simulated
    barcode to deceive shoplifters which can be deactivated at the point of sale
    at the counter; used to protect any non-metallic products
   Radio Frequency (RF) labels: paper thin, self adhesive labels with
    simulated barcode which can be deactivated at the point of sale at the
    counter, like AM tags but much more preferred by retailers due to more
    system choices to compliment store layouts, more label choices than and a
    lower investment
   Radio Frequency Identification (RDIF): consists of an antenna, an
    transponder (RF tag) and transreceiver (decoder); the antenna emits radio
    signals to activate tag and read and write data onto it, transreceiver and
    transponder acts as a reader which emits radio waves ranging from 1 inch
    to 1000ft or more so when tags pass through electromagnetic zone it
    detects the readers signal, and reader decodes data in silicon chip then
    passes to host computer for processing
               The End

Special Thanks to:
               Michael A. Aceves
                    Kiet T. Diep
                 Alan E. French
                   Shasha Guan
                    Noela Ieong
                   Sara Zarineh

				
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