Create an account
system accounting for DISTINCT cost objects called Jobs. Each job may be different from the
Indirect costs based on the ACTUAL indirect-cost rates times the actual activity consumption
Indirect costs based on the BUDGETED indirect-cost rates times the actual activity consumption
Seven-step Job Costing
1) Identify Cost Object
2) Identify the Direct Costs
3) Select the Cost-Allocation base to use for allocating Indirect Costs to the Job
4) Match Indirect Costs to Cost-Allocation base
5) Calculate an Overhead Allocation Rate:
Actual OH Costs ÷ Actual OH Allocation Base
6) Allocate Overhead Costs to the Job:
OH Allocation Rate x Actual Base Activity For the Job
7) Total Job Costs = adding all direct and indirect costs together
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