Ch 3

Question 0

Job-order costing, define, example? How is average cost per unit arrived at in the example?

Answer 0

Used in situations where many different products
Are produced each period

Ex. An order of 1,000 bootcut jeans, style # A312
This order of 1,000 jeans from Levi’s is called a “job”
Job order costing system, costs are traced and allocated
To jobs
Average cost/ unit = costs of job/# units in job

Question 1

Absorption costing

Answer 1

All manufacturing costs (fixed + variable) are assigned
To units of product

Note: Units fully absorb manufacturing costs

Question 2

Bill of materials

Answer 2

Document that lists the type and quantity of each

Direct material needed to complete a unit of product

Question 3

Materials requisition form

Answer 3

Document that specifies type and quantity of
Materials to be drawn from storeroom and
Identifies the job that will be charged for the cost of materials

Used to control flow of materials to production +
Make accounting entries

Question 4

Job cost sheet

Answer 4

Records materials, labor, manufacturing overhead

Costs charged to job

Question 5

Time ticket

Answer 5

Hour by hour summary of employee’s activities

Throughout the day

Question 6

Allocation base, define. 4 examples?

Answer 6

Measure used to assign overhead costs to products and services

Ex. Direct labor hours (DLH), machine hours (MH),
direct labor cost, units of product

Question 7

Predetermined overhead rate

Answer 7

Predetermined overhead rate =
(Estimated total manufacturing overhead cost)/(estimated total
amount of allocation base)

Question 8

Overhead application, equation?

Answer 8

Process of assigning overhead costs to jobs

Overhead applied to particular job =
Predetermined overhead rate X amt of allocation base incurred
By the job

Question 9

Normal cost system

Answer 9

Applies overhead jobs by multiplying
predetermined overhead rate by
actual amt allocation base incurred by jobs

Question 10

Cost driver, examples 4?

Answer 10

Factor that causes overhead costs

Ex. Machine hours, beds occupied, computer time, flight hours

Question 11

Raw materials

Answer 11

Included any materials that go into final product

Asset account

Question 12

Work in process

Answer 12

Consists of units of product that are partially complete

And require further work before ready for sale

Question 13

Finished goods

Answer 13

Completed products that have not been sold to customers

Question 14

Cost of goods manufactured

Answer 14

Manufacturing costs associated with goods finished

During period

Question 15

Schedule of cost of goods manufactured

Answer 15

Contains 3 elements of product costs:
Direct materials, direct labor and manufacturing overhead
It summarizes portions of those costs that
Remain in ending Work in Process inventory
As they are transferred out of Work in Process
Into Finished Goods

Question 16

Schedule of cost of goods sold

Answer 16

Contains direct materials, direct labor
and manufacturing overhead
Summarizes portions of those costs that remain
In ending Finished Goods inventory that are transferred
Out of Finished Goods into Cost of Goods Sold

Question 17

Underapplied or overapplied overhead

Answer 17

Difference btw overhead cost applied to work in process

and actual overhead costs of period

Question 18

Plantwide overhead rate

Answer 18

Single predetermined overhead rate for entire factory

Question 19

Multiple predetermined overhead rate system

Answer 19

Each production department may have its own

Predetermined overhead rate