ch 4 job costing

Question 1

LO

Answer 1

1 describe the building-block concepts of costing systems
2 distinguish job costing from process costing
3 describe the approaches to evaluating and implementing job-costing systems
4 distinguish between actual, budgeted, and normal costing
5 analyze the flow of costs from direct and indirect cost pools to inventory accounts, including adjustments for over- and under-allocated costs

Question 2

job-costing system

Answer 2

the cost object is a unit or multiple units of a distinct product or service called a job

Question 3

process-costing system

Answer 3

the cost object is masses of identical or similar units of a product or service

Question 4

steps of job costing implementation

Answer 4

1 identify the problems and uncertainties
2 obtain info
3 make predictions about the future
4 make decisions by choosing among alternatives
5 implement the decision, evaluate performance, and learn

Question 5

budgeted indirect cost rate =

Answer 5

budgeted annual costs / budgeted annual quantity of the cost-allocation base

Question 6

steps to assign costs to an individual job

Answer 6

1 identify the job that is the chosen cost object
2 identify the direct costs of the job
3 select the cost-allocation bases to use for allocating indirect costs to the job
4 identify the indirect costs associated with each cost-allocation base
5 compute the rate per unit of each cost-allocation base used to allocate indirect costs to the job
6 compute the indirect costs allocated to the job
7 compute the total cost of the job by adding all direct and indirect costs assigned to the job

Question 7

adjusted allocation rate approach

Answer 7

restates all overhead entries in the general ledger and subsidiary ledgers using actual cost rates rather than budgeted cost rates

Question 8

proration approach

Answer 8

spreads underallocated overhead or over allocated overhead among ending WIP inventory, FG inventory and COGS