Job Order Costing - Overheads, Cost Accounting Video Lecture | Cost Accounting - B Com

in this video we're going to talk about
job order costing so when a firm has
multiple different products let's say a
firm that manufactures playground
equipment the firm has to use job order
costing when determining its costs now
let's just compare and contrast this for
a moment with a firm that just has a
homogeneous project a product such as
oil right so all oil is basically the
same right oil is oil and so if a firm
just is dealing with oil then they
really they use a process costing system
they don't have to worry about a
specific cost for each job or each time
someone orders a batch of oil or a
certain amount of oil they don't have to
go and cost it out it's all basically
handled the same way but when a firm has
for example different products such as
playground and like a slide and then
they've got swings and they've got
different things so the firm can't treat
these all is just the exact same product
right they have different cloths it
might be that the slide uses entirely
different raw materials takes different
amount of labor and everything to build
it than a set of swings right but oil
can just all be just kind of treated the
same so so oil we'd be talking about a
process costing system will through deal
with another video but something like
playground equipment or any kind of
firmness dealing with different products
right so different products we've got
job order costing and that the idea it's
just being what kind of product is it
homogeneous or is it different so
different we're going to use job order
costing and we're going to come out with
a little thing called a job cost sheet
right so if someone says hey I want to
slide I want to order a slide we're
going to we're going to generate a job
cost sheet so let me just give you an
idea of what this would look like we'll
just say job cost sheet and in that job
cost sheet we're going to have several
things but things we will definitely
have we're going to have a section for
the direct materials or raw materials
I'll just abbreviate that direct labor
I'll just abbreviate that and then
manufacturing overhead that is being
applied okay
now again we're going to talk about
applied manufacturing overhead because
we won't know what the actual overhead
is till the end of the period typically
so in our job cost sheet we've got these
three things and that's going to come
out with a cost for the job right if
someone says hey I want this slide be a
nice thing if we could sit down and
figure ok what would actually cost for
us to make this slide so let's let's
actually put some numbers to this and
let's say let's call this job a 237 so
we'll call this this is job cost sheet
for a 237 job a 237 right there be a job
a 238 might be a set of swings and but
here is a 237 and we're going to cost
this out so let's say that we take a
look and the raw materials for this job
there are a thousand dollars right now
the direct labor we say ok well it took
to build this slide let's say it took 50
hours 50 hours of labor at $10 an hour
so if you just multiply the 50 times 10
you're going to get 500 so then the
direct labor is 500 right now the
manufacturing overhead now again with
this is going to be applied now in this
case it depends on a cost driver but
let's say our cost driver is labor hours
so it's a plate or excuse me applied
based on labor hours and let's say that
our predetermined overhead rate which we
have already calculated to talk about in
another video how to do that let's say
that's 4 dollars right so let me just
separate that out so remember our driver
is labor hours our rate is 4 dollars so
we've got 50 labor hours so we just take
the 50 times our rate of 4 and that's
going to give us our manufacturing
overhead the amount that we apply to
this job and that's 200 now and I should
have left a little space will have the
total cost for this job total cost it's
going to be $1,700