Accounting Job Costing

In: Business and Management

Submitted By Vagesha
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Job Costing
In Brief
Custom products and services, which are produced singly or in small batches, need to be valued for financial statements, tax reporting, and management monitoring. Job costing is an accounting method used to assign product costs to custom products or services. In job costing, direct costs are traced and overhead costs are allocated to individual jobs. Sometimes defects occur in custom products. Defective units can sometimes be reworked. The costs for both spoilage and rework need to be accounted for, as does the cost of scrap that arises from production.

This Chapter Addresses the Following Questions:
How are costs assigned to customized goods and services? How is overhead allocated to individual jobs? What is the difference between actual costing and normal costing? What are the uses and limitations of job cost information? How are spoilage, rework, and scrap handled in job costing? What are the quality and behavioral implications of spoilage?



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BOMBARDIER: CUSTOM MANUFACTURING n 1942, the Canadian company L’AutoNeige Bombardier Limitée began manufacturing tracked vehicles for snow-covered terrain. These vehicles were early models of what later became snowmobiles. In English, L’Auto-Neige means snow car. Over time, the company developed expertise in building engines and expanded into other markets such as personal watercraft, aircraft, subway cars, buses, and jet boats. The company, eventually known as Bombardier Inc., continued to expand, often by acquiring existing companies. For example, it acquired Canadair (the leading Canadian aircraft manufacturer), Pullman Railcars in the United States, and an Irish manufacturer of civil and military aircraft and defense systems. In 1990, Bombardier acquired Learjet Corporation, a U.S. manufacturer of…...

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