Job Order Cost System Journal Entries (Chapter 19):

Accumulating Manufacturing Cost Entries

1. Raw Materials Inventory
xxxx
Accounts Payable
xxxx
(Purchase of raw materials (direct and indirect) on account)
2. Factory Labor
xxxx
Wages Payable
Taxes Payable
Benefits Payable
(To record factory labor (direct and indirect) costs)

xxxx
xxxx
xxxx

3. Factory (Manufacturing) Overhead

Accounts Payable
(To record overhead costs)

xxxx

xxxx

Assigning Manufacturing Costs to Work in Process Entries

4. Work in Process Inventory (direct)
Factory (Manufacturing) Overhead (indirect)
Raw Materials Inventory
(To assign materials to jobs and overhead)

xxxx
xxxx

5. Work in Process Inventory (direct)

Factory (Manufacturing) Overhead (indirect)
Factory Labor
(To assign labor to jobs and overhead)

xxxx
xxxx

xxxx

xxxx

6. Work in Process Inventory

xxxx
Factory (Manufacturing) Overhead
xxxx
(To assign overhead to jobs. Based on predetermined rate)
Estimated Annual Overhead Costs
Expected Annual Operating Activity = Predetermined OH Rate
7. Finished Goods Inventory
Work in Process Inventory
(To record completion of job)

xxxx

8. Accounts Receivable
Sales
(To record sale of job)

xxxx

Cost of Goods Sold

Finished Goods Inventory
(To record cost of sale)

xxxx

xxxx

xxxx

xxxx

Job Cost Sheet

Job No.__________
Customer Name and Address_________________________________
Job Description_____________________________________________
Start Date______________
Completion Date____________

Date

Direct Materials
Requisition
Numbers

Amount

Direct Labor
Labor Time Record
Numbers

Manufacturing
OH
Allocated
Amount

Date

Rate

Amount

Overall Cost Summary

Direct Materials $_____________
Direct Labor

$_____________

Manufacturing
Overhead

$_____________

Total Job
Cost $
2

Cost of Goods Manufactured Schedule layout

Company Name
Cost of Goods Manufactured Schedule
For the year ended December 31, 20xx
Work in process, beginning
Direct Materials:
Raw materials inventory, beginning
$xxxx
Raw materials purchase
xxxx
Total raw materials available for use
xxxx
Less: raw materials inventory, ending
(xxxx)
Direct Materials used
Direct Labor
Manufacturing Overhead: (rate x actual activity usage)
Total Manufacturing Costs
Total cost of work in process
Less ending work in process
Total Cost of Goods Manufactured

$xxxx

xxxx
xxxx
xxxx
xxxx
xxxx
(xxxx)
xxxx

Chapter 19
Key Points To Remember

There are two types of Cost Accounting Systems:
o Job Order System used when a company manufactures batches of unique products.
o Process Costing System used when a company manufactures batches of an identical
product.

Cost Accounting Systems measure, record, and report product costs.

A Job Order System uses only one WIP account.

The formula for calculating the Predetermined Rate = Estimated MOH Estimated Activity Base

To calculate the amount of MOH applied to a particular job:
o Predetermined Rate x Amount of the Activity incurred by the job

A cost driver or activity base is an activity such as direct labor hours that causes MOH costs.

All purchases of Raw Materials are initially debited to the asset account Raw Materials (the cost is
not expenses until the finished product is sold). Raw Materials is a Control Account.

Factory Labor is not a Control Account and includes:
o Gross Earnings
o Payroll Taxed
o Fringe Benefits (may be included in MOH)

Manufacturing Overhead is a Control Account.

Actual MOH costs are debited to MOH and applied MOH costs are credited to MOH.

At the end of the accounting period MOH has to cleared out (zeroed out) by adjusting the account
for any remaining balance.

If MOH is underapplied then prior to adjusting the account has a debit balance.

MOH is overapplied then prior to adjusting the account has a credit balance.


Any amount of MOH that is remaining is closed to Cost of Goods Sold at the end of the year and
the adjusted amount is used to calculate Cost of Goods Sold.