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This paper describes a classroom Job-Order Costing and manufacturing simulation called Lumberjack Construction. This simulation is used in introductory managerial accounting and cost accounting courses to help students understand the various parts of the manufacturing process and the application of Job-Order Costing principles. For this simulation, students are placed into manufacturing groups. Each group is responsible for manufacturing a building and calculating the cost of that building using job-order costing.
INTRODUCTION
Concepts in introductory managerial accounting and cost accounting courses can be challenging for students and faculty because many of these concepts are rooted in manufacturing. However, few students have been exposed to a manufacturing environment. In these courses, students are also introduced to multiple ways of allocating costs to jobs and products. The combination of an unfamiliar work setting and the introduction of multiple abstract allocation concepts make it difficult for faculty to help students grasp these principles. Nevertheless, it is important for students to understand how costs are distributed among different products, as this information is vital not only to accounting majors, but across numerous business disciplines such as marketing, management, economics, and finance. This paper describes a Job-Order Costing and manufacturing simulation that promotes understanding of the cost allocation process, the manufacturing environment and the tracking of costs within this environment.
The remainder of this paper is organized as follows. First, the Job-Order Costing/Manufacturing simulation is described. Second, learning objectives along with guidance on simulation implementation is discussed. Third, evidence supporting the efficacy of the simulation is considered.
JOB-ORDER COSTING AND MANUFACTURING SIMULATION
Students often have difficulty understanding managerial accounting concepts that are based in a manufacturing environment. Most introductory managerial accounting textbooks initially teach cost terminology and then introduce job order costing to assign direct materials, direct labor, and to apply manufacturing overhead costs to products. Students are often confused with these concepts as they have never been exposed to a manufacturing environment. Consequently, terminology such as direct labor. direct materials, and materials requisitions is difficult to understand because they are not able to apply this terminology to a real-life scenario. In order to improve comprehension of these concepts, this simulation lets students complete a small scale building project within the classroom and calculate costs of their building.
At the...