Two methods that companies can use to keep track of them product cost
1. job order costing: we keep track of the cost of the each individual job or item movie the luxury
2. processes costing: we don’t track of each individual job or item We calculate the overage of the jobs or items Most cars in here Honda bmw benze Pepsi:
Product cost: direct materials, direct labor, and manufacture overhead.
Prime cost: direct material, direct labor
Conversion costs: direct labor, manufacture overhead
Documents used by manufacturing company 1. Job cost sheet: only used in job order costing, this document will keep track of cost each item or job. 2. purchase : prepare by the department that needs materials Request for materials: sent to the purchasing department.
3. Purchase order: prepare by the purchasing department and sent to vender. Description: quantity and the agreed price.
4. Recessing repeat : by the department recessive the goods, used to document the quantity receive #4 DR material inventory CR accounts payable
5. Material requztion: the purpose this document is to the transfer from material to WIP inventory
#5 DR WIP inventory CR raw material inventory 6. Labor time tickets: this document will keep track of employee hours by jobs or items #6 Only use in job or costing
Job order costing: we keep track of each item or job,
Job cost sheet : direct material Direct labor Manufacturing overhead
Direct material and the direct labor is the direct cost, and its easily traceable.