Chapter 2

Question 1

When are job-order costing systems used? (3 reasons)

Answer 1

1) Many different products/jobs are produced each period
2) Products are made to order
3) Each order requires tracing or allocating costs to each job, and maintaining cost records for each job

Question 2

T/F- Job-order costing charges direct material and
direct labor costs to each
job as work is performed

Answer 2

True

Question 3

T/F- Manufacturing Overhead costs, including indirect materials and indirect labor,
are allocated to jobs rather than
directly traced to each job

Answer 3

True

Question 4

What kind of activity is used to assign manufacturing overhead to individual jobs?

Answer 4

Allocation Base Activity

Question 5

What are examples of allocation base activity?

Answer 5

Direct labor hours
direct labor dollars
machine hours

Question 6

T/F- Allocation needs to be measurable and fair

Answer 6

True

Question 7

What is the O/H rate?

Answer 7

Estimated total manufacturing o/h cost for the coming period
DIVIDED BY
Estimated total units in the allocation base for the coming period

Question 8

T/F- The predetermined overhead rate used to apply overhead to jobs is determined before the period begins

Answer 8

True

Question 9

Ideally, the allocation base is a ***** that causes overhead. It should be easy to measure.

Answer 9

Cost Driver