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Job Order Costing The Chocolate Chip Cookie Project Activity: Job Order Costing

The Chocolate Chip Cookie Project

1. Select a company name for your cookie company.

2. Determine job specifications: cookie quality, size, appearance, special features (types of chips, nuts) quantity, and packaging. (See the quality standards information below).

3. Determine production tasks and feel free to enlist your family, friends or classmates in this project. If you enlist help, you may want to make team assignments (i.e., mixer, baker, timer, quality control, materials purchaser, accountant, marketer).

4. Select a recipe.

5. Using Excel, develop job measurement document. (See information below)

6. Using Excel, develop job order cost card. (See information below)

7. Produce your product and complete the job measurement and job cost information.

8. Take a picture of your final product and create a promotional piece for your product. (Create in Microsoft Office Word (.doc or .docx) or Rich Text format (rtf.)

9. Evaluate results of your process, and final product. Determined your quality standards. (See information below). (Create your final evaluation results in a Microsoft Office Word (.doc or .docx) or Rich Text format (rtf.) for submission.)

Job Measurement Document Criteria (Item 5 Above)

Cost per cookie

Number of cookies produced=number meeting specs + number rejected + number reworked + number sampled for quality control + unexplained differences

Size of cookies before baking

Size of cookies after baking

Total throughput time=mix time + (bake time for one cookie sheet x number of cookie sheets processed) + packaging time + downtime + cleanup time Required Comments:

What is your cost per cookie? What measures did you use to effectively evaluate production performance?

What measures did you find unnecessary? Why? Job Order Costing The Chocolate Chip Cookie Project 2 Job Order Cost Card (Item 6 Above)

Assume an overhead rate of $2 for every $1 of direct materials.

Assign each production task an hourly rate or a monthly salary based on your perception of the job market for the task involved.

Attempt to quantify actual overhead. List the types of costs that would go into your actual overhead.

Evaluate the $2 overhead rate for reasonableness.

Reference text Job Order Costing chapter for Job Order Cost Card examples Promotional Piece (Item 8 Above) Create a flyer to promote your product. The flyer should include:

Your chosen company name

Job specifications

Recipe

Job cost card

A picture of your final cook product

What makes your cookie better than the competition? Utilize your predetermined evaluation criteria in your promotion.

Background: After presenting the basics of the job cost system and the concept of the product value chain, you will form your own "corporation" to produce cookies. Your corporation determines and collects the data and information needs of the company as you follow the total value chain of a product from idea generation to product design to material acquisition and handling to cookie production to packaging to distribution and to verification of customer satisfaction. In other words, your company formulates an original chocolate chip cookie product, manufacture it, and markets it to the class by creating a promotional piece. The first part of this page details the particulars of this assignment. Note: The new manufacturing setting requires additional data be collected for performance evaluation. So, in addition to computing the cost per cookie in both the job and process cost activities, students track time spent in setup, mixing, baking, packaging, cleanup, and downtime. Students also account for all cookies produced: those that met specifications, were rejected, were reworked, were sampled for quality control, and any unexplained differences. Students finally measure the size of the cookies before and after baking. With these additional measures, students have the data to compute some of the basic measurements desired in the new manufacturing throughput setting. Job Order Costing The Chocolate Chip Cookie Project 3 Quality Standards To judge the quality of your cookies, read the Consumers Reports article on chocolate chip cookies that appeared in the October 1993 issue, pages 643 647. This article is one of the attachments for this project. The article discusses and rates packaged, mix and bake, and scratch cookies. After reading this article, choose three primary evaluation criteria for verification of customer satisfaction which are used to evaluate the Job Cost Activity. Evaluate the job cost cookie displays first by appearance and then by tasting the top three choices and ranking your preferences based on the predetermined evaluation criteria.