{"id":144,"date":"2021-01-26T22:15:07","date_gmt":"2021-01-26T22:15:07","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/?post_type=chapter&#038;p=144"},"modified":"2021-05-13T23:12:47","modified_gmt":"2021-05-13T23:12:47","slug":"introduction-to-job-order-costing","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/chapter\/introduction-to-job-order-costing\/","title":{"raw":"Introduction to Job Order Costing","rendered":"Introduction to Job Order Costing"},"content":{"raw":"<h2>What you will learn to do: Understand the characteristics of job order costing<\/h2>\r\n<img class=\"size-medium wp-image-1648 alignleft\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/13231151\/courtney-smith-DI-Z9JzZVQI-unsplash-200x300.jpg\" alt=\"Kitchen with tall cabinets\" width=\"200\" height=\"300\" \/>There are two general methods of tracking costs in a manufacturing business: process costing and job costing.\r\n\r\nJob order costing is a method of cost accumulation that is used for items or batches of items that are unique \u2013 that is, each customer\u2019s order is different. Custom-made kitchen cabinets are an example of a manufactured product that is often customer-specific. Each order is based on different sizes, layouts, wood choices, finishes, hardware, installation costs, customer preferences, etc. No two orders are alike, so the total cost of each order will differ as a result. A single order might involve a homeowner updating her kitchen for a new look. A batch order might be processed for a home builder who is constructing 10 identical homes and therefore requires 10 of the same sets of cabinets. Each single or batch order is referred to as a job and is assigned a unique identification number, such as \u201cJob 15\u201d.\r\n\r\nThe accounting flow of costs follows the physical flow of the manufacturing process in most companies. In this chapter and the next, we assume costs follow the physical flow of products. In discussing product costing, we described how accountants and managers assign costs to products. Recall that products can be either goods or services, so this discussion applies to service and merchandising companies as well as to manufacturing companies.\r\n\r\nWhen you are done with this section, you will be able to:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Identify circumstances where job order costing is appropriate<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Compare and contrast job order costing and process costing<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Calculate job costs for a service business<\/li>\r\n<\/ul>\r\n<h3>Learning Activities<\/h3>\r\nThe learning activities for this section include the following:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Characteristics of Job Order Costing<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Characteristics of Job Order Costing<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Jobs v. Processes<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Jobs v. Processes<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Job Order Costing for a Service<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Job Order Costing for a Service<\/li>\r\n<\/ul>","rendered":"<h2>What you will learn to do: Understand the characteristics of job order costing<\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-1648 alignleft\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/13231151\/courtney-smith-DI-Z9JzZVQI-unsplash-200x300.jpg\" alt=\"Kitchen with tall cabinets\" width=\"200\" height=\"300\" \/>There are two general methods of tracking costs in a manufacturing business: process costing and job costing.<\/p>\n<p>Job order costing is a method of cost accumulation that is used for items or batches of items that are unique \u2013 that is, each customer\u2019s order is different. Custom-made kitchen cabinets are an example of a manufactured product that is often customer-specific. Each order is based on different sizes, layouts, wood choices, finishes, hardware, installation costs, customer preferences, etc. No two orders are alike, so the total cost of each order will differ as a result. A single order might involve a homeowner updating her kitchen for a new look. A batch order might be processed for a home builder who is constructing 10 identical homes and therefore requires 10 of the same sets of cabinets. Each single or batch order is referred to as a job and is assigned a unique identification number, such as \u201cJob 15\u201d.<\/p>\n<p>The accounting flow of costs follows the physical flow of the manufacturing process in most companies. In this chapter and the next, we assume costs follow the physical flow of products. In discussing product costing, we described how accountants and managers assign costs to products. Recall that products can be either goods or services, so this discussion applies to service and merchandising companies as well as to manufacturing companies.<\/p>\n<p>When you are done with this section, you will be able to:<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Identify circumstances where job order costing is appropriate<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Compare and contrast job order costing and process costing<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Calculate job costs for a service business<\/li>\n<\/ul>\n<h3>Learning Activities<\/h3>\n<p>The learning activities for this section include the following:<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Characteristics of Job Order Costing<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Characteristics of Job Order Costing<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Jobs v. Processes<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Jobs v. Processes<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Job Order Costing for a Service<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Job Order Costing for a Service<\/li>\n<\/ul>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-144\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Introduction to Job Order Costing. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Principles of Managerial Accounting. <strong>Authored by<\/strong>: Christine Jonick. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/ung.edu\/university-press\/books\/managerial-accounting.php\">https:\/\/ung.edu\/university-press\/books\/managerial-accounting.php<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><li>Kitchen cabinets. <strong>Provided by<\/strong>: Unsplash. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/unsplash.com\/photos\/DI-Z9JzZVQI\">https:\/\/unsplash.com\/photos\/DI-Z9JzZVQI<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/cc0\">CC0: No Rights Reserved<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":364389,"menu_order":2,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Introduction to Job Order Costing\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Principles of Managerial Accounting\",\"author\":\"Christine Jonick\",\"organization\":\"\",\"url\":\"https:\/\/ung.edu\/university-press\/books\/managerial-accounting.php\",\"project\":\"\",\"license\":\"cc-by-sa\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Kitchen cabinets\",\"author\":\"\",\"organization\":\"Unsplash\",\"url\":\"https:\/\/unsplash.com\/photos\/DI-Z9JzZVQI\",\"project\":\"\",\"license\":\"cc0\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-144","chapter","type-chapter","status-publish","hentry"],"part":29,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/144","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/wp\/v2\/users\/364389"}],"version-history":[{"count":4,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/144\/revisions"}],"predecessor-version":[{"id":1650,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/144\/revisions\/1650"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/parts\/29"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/144\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/wp\/v2\/media?parent=144"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=144"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/wp\/v2\/contributor?post=144"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/wp\/v2\/license?post=144"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}