Instructions:

1.Create a product that is appropriate to apply Job Order Costing.

(customized product based on customers' specifications and requirements)

2.Assume your company applies Job Order Costing in ascertaining cost of individual jobs.

3.Assume you have received an order from a customer named Mr. Zack. The order is known as Job 007.

Assignment Report:

Your report must consist of the followings:

1.Brief explanation of your company and the costing method applied (Job Order Costing) in determining product cost by job.(5 marks)

2.Detailed explanation about your product and the types of production costs that usually incur to produce the product. (i.e. direct materials, direct labour, direct expenses and production overhead).(10 marks)

3.Describe Mr. Zack's requirements to Job 007.

4.Job cost sheet of Job 007, to determine the prime cost, production cost and total cost of Job 007.

5.Costs incurred other than production costs such as administrative costs, selling and distribution costs that associated with the Job (to be included in the job cost sheet).

6.Provide the details of each cost incurred (in no. 4 and 5 above) to the job.

(25 marks)

7.Desired profit margin/markup of the Job 007.

(5 marks)

8.Selling price of Job 007.

(5 marks)

INTRODUCTION

Butter Bean Bakery is bakery shop that produces custom-made cookies, cakes, breads and many types of pastries. Our company takes order from customer at our shop and online. The most demand item is cake. Therefore, we produce variety of cakes like black forest cake, red velvet cake, and moon cake that has the most demand during the festival season.

Since our company produce many different type of product and we do take special orders from customers, our costing method is job order costing. We use this costing method because it can help the manager to plan, direct and motivate, control and make decision. This costing method is the most suitable method in our business.

Detailed explanation

Once received the order, we will measure the direct material cost. After the production order has been issued, our accounting department will prepare a job cost sheet. The direct labour cost is counted based on the punch card on each employees. In determining the production overhead, we apply the predetermine overhead rates to charge the cost of these department to the customers.

Table below shows the predetermine overhead cost based on the managements' estimation based on direct labour hours.

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