ABSTRACT
This chapter focuses on three areas of cost assignment job costing, process costing, and variable costing, as distinct from absorption costing. Job costing is an accounting system that traces costs to specific job, service, or activity. Tracing costs to a specific job makes it possible for an organization to determine the costs it will accumulate separately for materials, labor, and overhead. Convention dictates that when liabilities are incurred by organization, which should also apply to government, they should be recognized as such and vouchers should be issued before paying the liabilities in cash. Therefore, the journal entries must include a recognition of liability when vouchers are issued and a payment of liability when cash payments are made. The rationale for including partially completed units in cost assignment is that even though they have not been fully completed, the department or departments involved in the process did incur some costs for the portion of the job that has been completed.
