Accounting › Section R · Job order and process costing › Topic R.2
Product cost components and their flow
A manufactured product carries three kinds of cost, and those costs travel with it through three inventory accounts before they finally become an expense. Following that path is the backbone of job order costing.
In this topic
- Three components, three inventories
- Direct materials
- Direct labour
- Manufacturing overhead
- How the costs flow
- Job cost sheets as a subsidiary ledger
- Worked example: the March job cost sheets
- Worked example: cost of goods manufactured
- From manufactured to sold
- Common mistakes to avoid
- Key takeaways
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