In eight pages this paper explains job order costing and job cost analysis in a consideration of the various alternative available to computer manufacturing businesses. Six sources are cited in the bibliography.
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This kind of an analysis includes all components in the manufacturing process and considers the following lengthy list of tasks: * Direct materials purchased to manufacture the product, including raw
materials or component parts (MIT, nd; Baylor College, nd). * Direct labor used to manufacture the product (MIT, nd; Baylor College, nd). * Overhead costs, e.g., rent, utilities, and
so on (MIT, nd; Baylor College, nd). * Costs incurred to advertise and sell the product (MIT, nd). * Costs incurred to transport the product (MIT, nd). As an
example, we could look at the hypothetical case of calculating a job cost sheet for manufacturing the motherboard in a computer. We will make the following assumptions for our
hypothetical case: * The company bought 10,000 wafers that cost $0.50 each for a total of $5,000. * It takes 20 hours of labor to work with the wafers and
that costs $8.00 per hour for a total of $160. * 10,000 chips are needed at a cost of $1.00 per chip for a total cost of $10,000. * It
takes 40 hours of labor to work with the chips at a cost of $10 per hour for a total of $400. * There are assembly costs to combine
the chips and wafers and put them on the motherboard. This costs $10 per hour and requires 56 hours for a total of $560. These can be considered overhead costs
or indirect costs. The total cost of materials is $15,000. The total cost for direct labor is $560. The total indirect cost to assemble the components is $560.
The total cost for this job is $16,120. Job order costing is a bit different. In this approach, the cost for the whole job is considered. The costs are