Prepare a sample journal entry to dispose of any under- or over applied overhead under normal costing.

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Discussion: Job Order Costing in Industry

To begin, select one of the following types of businesses:

  • Custom home builder
  • Auto repair shop
  • Accounting firm
  • Lawn service company
  • Television show production
  • Airplane built for the U.S. Air Force

I selected: Accounting Firm.

Describe how your chosen business might use job order costing to account for its product(s) or service(s). Explain the types of costs that would be classified as direct versus indirect, variable versus fixed, and product versus period. Be sure to address the overhead allocation base that you would suggest for the company to use by presenting an example of how your type of business would account for overhead and prepare a sample journal entry to dispose of any under- or over applied overhead under normal costing.

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