CH 4 Job Costing

Question 1

cost pool

Answer 1

any logical grouping of a related cost object

Question 2

cost allocation base

Answer 2

a cost driver os used as a basis upon which to build a systematic method of distributing indirect costs.

Question 3

job costing

Answer 3

system accounting for distinct cost objects called jobs. each job may be different from the next, and consumes different resources.

Question 4

Process costing

Answer 4

system accounting for production of identical or similar products. (Oil refining, orange juice)

Question 5

actual costing

Answer 5

indirect costs based on actual indirect costs rates times the actual activity consumption.

Question 6

normal costing

Answer 6

indirect costs based on the budgeted indirect-cost rates times the actual consumption

Question 7

7 Steps of job costing

Answer 7

1. Identify the job
2. Identify the direct costs
3. Select the cost allocation base
4. Match indirect costs to their cost allocation base
5. Actual Cost, Normal Costing
6. Allocate Overhead Costs to the Job
7. Compute Total Job Costs

Question 8

Journal Entries

Answer 8

Journal Entries are done at each step of production

The purpose is to have a the accounting system closely reflect the actual state of the business

Question 9

Overhead Costs

Answer 9

Overhead is those costs required to run a business, but which cannot be directly attributed to any specific business activity, product, or service.
Thus, overhead costs do not directly lead to the generation of profits.

Question 10

3 Methods to adjust over/underapplied Overhead

Answer 10

• Adjusted allocation rate approach
• –all allocations are recalculated using the actual values
• proration approach
• –difference of costs of goods sold and finished goods
• write of approach
• –the difference is simply written off to costs of goods sold