Chapter 2: Job-Order Costing [Unit Product Costs]

Question 1

What is Absorption Costing?

Answer 1

A method that includes all manufacturing costs

Question 2

Allocation Base

Answer 2

A measure of activity such as labor-hours, or machine hours

Question 3

What is a Bill of Materials?

Answer 3

A document documenting how much of a material is required to manufacture a product.

Question 4

What is a cost driver?

Answer 4

A factor that causes overhead costs such as machine-hours, beds occupied, and flight-hours.

Question 5

Cost-price pricing

Answer 5

A predetermined markup, determining the target selling price

Question 6

What is a Job Cost Sheet?

Answer 6

A document recording the materials, labor, and overhead cost of a job.

Question 7

Material Requisition Form

Answer 7

A document the specifys’ the type and amount of a material that should be removed from the storeroom, and the job charged for the cost of them.

Question 8

Multiple Predetermined Overhead Rates

Answer 8

A system with several overhead cost pools, which have a different rate attached.

Question 9

Normal Cost System

Answer 9

Applies overhead to jobs by multiplying the overhead rate by the actual amount of allocation bases.

Question 10

Overhead Application

Answer 10

Assigning overhead to specific jobs

Question 11

What is the Plantwide overhead rate?

Answer 11

A single predetermined overhead rate used across the entire plant

Question 12

What is the Predetermined Overhead Rate?

Answer 12

A rate used to charge manufacturing overhead cost to jobs

Question 13

Predetermined Overhead Rate

Answer 13

Total Manufacturing Overhead / Total Amount of allocation base

Question 14

Time Ticket

Answer 14

A document recording how much time an employee spends on various activites

Question 15

How do you measure the Direct Materials Cost?

Answer 15

(1) Create a Production Order, (2) Create a Job Cost Sheet, (3) Measure Direct Labor Cost, (4) Assign and Compute Predetermined Overhead Rate

Question 16

What does a Job Cost sheet record?

Answer 16

Material, Labor, and MO costs

Question 17

How do you measure Direct Labor Costs?

Answer 17

By using a time ticket to track employees direct and indirect activites

Question 18

Predetermined Overhead Rate Formula

Answer 18

Total Estimated MO Rate / Estimated Total Amount of Allocation Base

Question 19

Cost Formula

Answer 19

Y= a +bX

Question 20

What does “Y” equal in the cost formula?

Answer 20

Estimated Total Manufacturing Overhead Cost

Question 21

What does “a” mean on the cost formula?

Answer 21

Estimated Total Fixed Manufacturing Overhead Cost

Question 22

What does “b” equal on the cost formula?

Answer 22

Estimated Variable Manufacturing Overhead Cost per unit

Question 23

What does “X’ equal on the cost formula?

Answer 23

Estimated total amount of allocation base

Question 24

Overhead Applied Formula

Answer 24

Predetermined Overhead Rate x Allocation Base

Question 25

How do you use multiple predetermined overhead rates?

Answer 25

(1) Calculate est total manufacturing overhead costs, (2) Calculate Predetermined Overhead Rates, (3) Calculate amount of overhead applied to job__, (4) Calculate Total Job Cost, (5) Calculate Selling Price

Question 26

How do you use the Two-Step Process (COGS)?

Answer 26

(1) Calculate Unit Products Costs, (2) Calculate Cost of Goods Sold

Question 27

How do you use the Two-Step Process (Finished Goods)?

Answer 27

(1) Calculate the number of units in ending finished goods, (2) Multiply Finished goods by Unit product costs