ECONOMICS

Detailed explanation-1: -The flow of costs (direct materials, direct labor, and manufacturing overhead) in job order cost accounting parallels the physical flow of the materials as they are converted into finished goods. Companies first accumulate manufacturing costs in the form of raw materials, factory labor, or manufacturing overhead.

Detailed explanation-2: -In a job costing system, the cost is tracked from raw materials to finished goods with costs such as direct labor, machine hours, and manufacturing overhead assigned to the job via a job cost tracking sheet. The costs are then utilized to assign a selling price for the item manufactured.

Detailed explanation-3: -Job costing is an accounting method designed to help you track the cost of individual projects and jobs. It involves looking at direct and indirect costs, and it’s usually broken into three specific categories: labor, materials and overhead.

Detailed explanation-4: -What is the most common sequence of the flow of costs through a job order costing system? Purchase raw materials, transfer raw materials to production, add direct labor and manufacturing overhead costs, transfer the cost of completed goods to finished goods inventory, sell goods and transfer cost to cost of goods sold.

Detailed explanation-5: -Job costing is a costing method used to determine the cost of specific jobs, which are performed according to the customer’s specifications. It is a basic costing method which is applicable where work consists of separate projects or contract jobs.