Podcast
Questions and Answers
What is the primary purpose of a job cost sheet in a job order costing system?
What is the primary purpose of a job cost sheet in a job order costing system?
- To allocate overhead costs to individual products.
- To track the cost of materials used in production.
- To determine the cost of goods sold for a specific job.
- To calculate the total cost of producing a specific job, including direct materials, direct labor, and overhead. (correct)
Which of the following costs would be considered a direct cost in a job order costing system?
Which of the following costs would be considered a direct cost in a job order costing system?
- Factory supervisor's salary.
- Depreciation on factory equipment.
- Factory rent.
- Direct materials used in production. (correct)
What is the key distinction between process costing and job order costing?
What is the key distinction between process costing and job order costing?
- Process costing is used for manufacturing homogeneous products, while job order costing is used for manufacturing customized products. (correct)
- Process costing allocates overhead costs based on production volume, while job order costing allocates overhead costs based on the number of jobs.
- Process costing tracks costs for each individual job, while job order costing tracks costs for each production process.
- Process costing is used for service industries, while job order costing is used for manufacturing industries.
Which of the following is a key step in the flow of manufacturing costs in a job order costing system?
Which of the following is a key step in the flow of manufacturing costs in a job order costing system?
In a job order costing system, how are labor costs typically recorded?
In a job order costing system, how are labor costs typically recorded?
Why are subsidiary records important in a job order costing system?
Why are subsidiary records important in a job order costing system?
What is the formula used to determine applied overhead costs?
What is the formula used to determine applied overhead costs?
Which of the following represents a component of overhead costs in job order costing?
Which of the following represents a component of overhead costs in job order costing?
How are actual overhead costs recorded in job order costing?
How are actual overhead costs recorded in job order costing?
What type of journal entry typically reflects indirect materials used?
What type of journal entry typically reflects indirect materials used?
In job order costing, how do overhead costs flow in the financial statements?
In job order costing, how do overhead costs flow in the financial statements?
Which of the following is NOT considered when recording other overhead costs?
Which of the following is NOT considered when recording other overhead costs?
What is the purpose of a receiving report in job order costing?
What is the purpose of a receiving report in job order costing?
When are materials ledger cards updated in job order costing?
When are materials ledger cards updated in job order costing?
What document details the specific materials needed for a job in job order costing?
What document details the specific materials needed for a job in job order costing?
In job order costing, which of the following best describes the flow of labor costs?
In job order costing, which of the following best describes the flow of labor costs?
What type of entry is used to record materials requisitioned for production?
What type of entry is used to record materials requisitioned for production?
Which document acts as a source for recording material costs in job order costing?
Which document acts as a source for recording material costs in job order costing?
Which element is NOT typically recorded on a job cost sheet?
Which element is NOT typically recorded on a job cost sheet?
What shows the total costs associated with each job in job order costing?
What shows the total costs associated with each job in job order costing?
What does the predetermined overhead rate (POHR) based on direct labor cost signify?
What does the predetermined overhead rate (POHR) based on direct labor cost signify?
How are labor costs recorded in a job order costing system?
How are labor costs recorded in a job order costing system?
What is the impact of an incorrect overhead rate on job costing?
What is the impact of an incorrect overhead rate on job costing?
When applying overhead costs, which method is typically used in job order costing?
When applying overhead costs, which method is typically used in job order costing?
Which of the following statements is true regarding job order costing?
Which of the following statements is true regarding job order costing?
Why is it important to track labor costs accurately in job order costing?
Why is it important to track labor costs accurately in job order costing?
In a job order costing system, which document is crucial for capturing the direct labor incurred?
In a job order costing system, which document is crucial for capturing the direct labor incurred?
What does the flow of overhead costs involve in job order costing?
What does the flow of overhead costs involve in job order costing?
What is generally the first step in determining the predetermined overhead rate?
What is generally the first step in determining the predetermined overhead rate?
What ratio is derived from dividing total estimated overhead costs by total estimated direct labor cost?
What ratio is derived from dividing total estimated overhead costs by total estimated direct labor cost?
Flashcards
Job Order Costing
Job Order Costing
A costing method that assigns costs to specific jobs or batches.
Job Cost Sheet
Job Cost Sheet
A document that records all costs for a specific job.
Flow of Manufacturing Costs
Flow of Manufacturing Costs
The path of costs from raw materials to sold goods.
Raw Materials Inventory
Raw Materials Inventory
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Work in Process Inventory
Work in Process Inventory
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Cost of Goods Sold
Cost of Goods Sold
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Materials Ledger Card
Materials Ledger Card
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Materials Requisition
Materials Requisition
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Receiving Report
Receiving Report
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Flow of Materials Costs
Flow of Materials Costs
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Labor Costs in Job Order Costing
Labor Costs in Job Order Costing
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Journal Entry for Materials
Journal Entry for Materials
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Predetermined Overhead Rate
Predetermined Overhead Rate
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Actual Overhead
Actual Overhead
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Indirect Material
Indirect Material
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Indirect Labor
Indirect Labor
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Other Overhead Costs
Other Overhead Costs
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Cost Flows to Financial Statements
Cost Flows to Financial Statements
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Labor Cost Flow
Labor Cost Flow
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Labor Time Ticket
Labor Time Ticket
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Overhead Costs Flow
Overhead Costs Flow
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Predetermined Overhead Rate (POHR)
Predetermined Overhead Rate (POHR)
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Application of Overhead
Application of Overhead
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Direct Labor Costs
Direct Labor Costs
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Overhead Allocation Base
Overhead Allocation Base
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Costs Entry in Job Order
Costs Entry in Job Order
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Study Notes
Job Order Costing - Chapter 15
- Job order costing is used by companies with custom orders, diverse products, and services, low production volumes and high product flexibility. Process costing is used for repetitive procedures, similar products, high production volumes and high standardization.
- Learning Objectives include conceptual and procedural aspects of job order costing.
- Conceptual objectives explain job order costing and job cost sheets. Analytical objectives apply job order costing in pricing services. Procedural objectives describe and record material, labor, and overhead costs in job order costing, and close overapplied and underapplied factory overhead.
- Cost flows in job order costing involve raw materials inventory, work in process inventory, finished goods inventory, and cost of goods sold. Subsidiary records detail manufacturing costs for each job.
- Job cost sheets detail costs for individual jobs: materials, labor, and overhead.
- Materials flow from receiving reports to materials ledger cards to requisition forms. These documents track direct and indirect materials used.
- Labor costs flow from time tickets to job cost sheets. Time tickets track employee time and direct labor costs, and salary contracts track indirect labor.
- Overhead costs are applied using a predetermined overhead rate calculated with estimated overhead costs and estimated activity base (often direct labor). Adjusting for over/under-applied overhead involves adjusting the cost of goods sold.
- Service companies use job order costing but do not have raw materials or finished goods inventories. Overhead is applied to direct labor or service costs.
- Pricing for services considers labor and overhead costs to determine the total cost for each job. Gross profit ratio for service companies is calculated by subtracting cost of services from service revenue, then dividing the result by service revenue.
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