Reference no: EM131126732

Interview an accountant who works for a service organization that uses job-order costing. For a small firm, you may need to talk to an owner/manager. Examples are a funeral home, insurance firm, repair shop, medical clinic, and dental clinic. Write a paper describing the job-order costing system used by the firm. Some of the ques- tions that the paper should address are

a. What service(s) does the firm offer?

b. What document or procedure do you use to collect the costs of the services per- formed for each customer?

c. How do you assign the cost of direct labor to each job?

d. How do you assign overhead to individual jobs?

e. How do you assign the cost of direct materials to each job?

f. How do you determine what to charge each customer?

g. How do you account for a completed job?

State how the service firm you investigated adapted the job-order accounting procedures described in the chapter to its particular circumstances. Were the differ- ences justified? If so, explain why. Also, offer any suggestions you might have for improving the approach that you observed.

Go to the Web site for Crayola, Inc.,

accessible via the chapter web links at the Interactive Study Center on www.thomsonedu.com/accounting/hansen. There is a "factory tour" that you can take. Take the factory tours for crayons and for markers. List the departments for each product. Verbally trace the flow of costs through each department to come up with a listing of total manufacturing costs for each of the finished products.

sequential (or step) method and the reciprocal method. These methods allocate service costs among some (or all) interacting support departments before allocating costs to the producing departments.

4. Compute departmental overhead rates. Departmental overhead rates are calculated by adding direct departmental overhead costs to those costs allocated from the support departments and dividing the sum by the budgeted departmental base.

5. (Appendix) Describe the allocation of joint costs to products.

Joint production processes result in the output of two or more products which are produced simultane-

ously. Joint or main products have relatively signifi- cant sales value. By-products have relatively less sales value. Joint costs must be allocated to the individual products for purposes of financial reporting. Several methods have been developed to allocate joint costs, including the physical units method, the sales-value- at-split-off method, and the net realizable value method. Typically, by-products are not allocated any of the joint product costs. Instead, by-product sales are listed as "Other income" on the income state- ment, or they are treated as a credit to Work In Process of the main product(s).