Lesson Plan 10.2 – Product Costing
Course Title – Accounting II
Lesson Title – Product Costing
Specific Objective - Learn about two cost accounting systems that
manufacturing businesses can use.
Performance Objectives:
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
Explain the difference between a Job Order Cost Accounting System and a
Process Cost Accounting System;
Journalize entries for a Job Order Cost System and a Process Cost System;
Apply factory overhead to work in process;
Account for over applied and under applied factory overhead;
Determine the unit cost of finished goods
Prepare a cost of production report;
Define accounting terms related to the lesson.
TEKS: 130.167.c:
5.C. – identify cost accounting systems such as job order costing, process
costing, activity-based costing, and project costing
TAKS: R1, M10
Preparation
Materials Needed:
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Projection system
Glencoe’s Textbook, Chapter 22, and Demonstration Problems
Century 21’s Textbook, Chapter 19
Accounting software and spreadsheet software
Sponge/Focus Activity:

Takin’ Care of Business Educational Handbook, Lesson 6: Market Analysis
“What’s New?”

Exploring the Real World of Business, in Glencoe’s Textbook
Lesson Content:
See Glencoe’s Textbook, Chapter 22, (pp. 654-681), or Chapter 19. Here is an
outline:
I.
Costing a product by job order
Lesson Plan 10.2 – Product Costing
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
II.
A. Cost accounting systems
B. Job order cost accounting system
C. Source documents used in a job order cost accounting system
1.
Job cost sheets
2.
Materials requisition forms
3.
Job order time cards
D. Journalizing transactions in a job order cost accounting system
1.
Journalizing materials transactions
2.
Journalizing labor transactions
3.
Journalizing factory overhead transactions
i.
Closing factory overhead accounts
E. Journalizing finished goods transactions
F. Journalizing the sale of goods
Costing a product by process
A. Process cost accounting system
1.
Equivalent units
2.
Journalizing transactions in a process cost accounting
system
3.
Journalizing materials transactions
4.
Journalizing labor transactions
5.
Journalizing factory overhead transactions
6.
Journalizing transfer transactions
7.
Journalizing the sale of goods
8.
Cost of production report
B. Analyzing manufacturing costs
Teaching Strategies:

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Glencoe’s Demonstration Problems.
With the Century 21 textbook, complete the Work Together problems as a
class, then let your students work the On Your Own problems by themselves
and go over the answers with them.
Assessment:

For problems you can use Peachtree Accounting from Glencoe, Glencoe
Accounting Software, Century 21 Accounting Software, or a spreadsheet.

From Glencoe’s Textbook
o Guided Practice
 22-1 Calculating the Factory Overhead Rate
 22-2 Calculating Equivalent Units
o Independent Practice
 22-3 Identifying Cost Accounting Systems
 22-4 Calculating Unit Manufacturing Costs
 22-5 Applying Factory Overhead Costs
 22-6 Recording Transactions in a Job Order Cost Accounting
System
 22-7 Examining Costs in a Process Cost System
Lesson Plan 10.2 – Product Costing
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
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22-8 Recording Transactions in a Process Cost Accounting
System
 22-9 Preparing a Cost of Production Report
 22-10 Recreating a Cost of Production Report
o Additional Activities: Using Key Terms, Understanding Accounting
Concepts and Procedures, Case Study, Internet Connection,
Conducting an Audit with Alex, and Workplace Skills
o Open Notes and textbook Quiz: Study Guide for Chapter
From Century 21’s Textbook:
o Guided Practice
 Work Together: Classifying manufacturing costs; specifying the
ledger used for initial recording
 On Your Own: Classifying manufacturing costs; specifying the
ledger used for initial recording
 Work Together: Determining total costs and unit cost for a job
and determining total cost for a finished item
 On Your Own: Determining total costs and unit cost for a job
and determining total cost for a finished item
o Independent Practice
 19-1 Classifying manufacturing costs and determining which
ledger to use for initial recording
 19-2 Classifying manufacturing costs and determining which
ledger to use for initial recording
 19-3 Calculating factory overhead applied rate
 19-4 Preparing a cost sheet
 19-5 Recording entries in a finished goods ledger
 19-6 Preparing cost records
 19-7 Preparing cost records
o Additional Activities: Applied Communication, and Cases for Critical
Thinking
o Open Notes and textbook Quiz: Study Guide for Chapters
This lesson is also assessed through the Unit Test at the end of the Unit.
Additional Resources:
Textbooks:
Guerrieri, Donald J., F. Barry Haber, William B. Hoyt, and Robert E. Turner,
Glencoe Accounting Real-World Applications & Connections, Advanced
Course, Fourth Edition, Glencoe McGraw-Hill: New York, New York.
Ross, Kenton E., CPA, Mark W. Lehman, CPA, Claudia Bienias Gilbertson, CPA,
Robert D. Hanson, Century 21 Accounting Advanced, Anniversary Edition,
Thomson South-Western: Mason, OH, 2003.
Takin’ Care of Business, Educational Handbook, American Institute of Certified
Public Accountants, 1211 Avenue of the Americas, New York, NY 100368775, www.aicpa.org.
Lesson Plan 10.2 – Product Costing
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Multimedia:
Century 21’s Teacher Resource CD
Websites:
http://accounting.swpco.com
Lesson Plan 10.2 – Product Costing
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II