Question

describe the flow of manufacturing cost in a Job Order Cost System.

Answer 1

Answer)

Unlike the retailers or wholesalers the manufacturer must divide his costs as manufacturing costs and no manufacturing costs.

Manufacturing costs are costs that are directly Traceable like direct material including raw material and other components,direct labour and other manufacturing overheads like manufactuting manager salaries etc which may change from job to job.

The direct material is traced based on the request to release materials to productions called materials requisition.By calculating the total costs on material requisite we would allocated the direct material cost to the particular job.

Direct labour is allocated based on the time and number of employees and cost per man hour.It can be known using time card or any other name it may be called,where the time and employees details may be recorded.

Manufacturing overhead may be somewhat complex as there are several ways to allocate overheads like based on cost of raw materials,direct labour hours and so on.