Chapter 20 - Job Order Costing Flashcards
How do we accumulate Manufacturing Costs?
In accumulating manufacturing costs, debit at least one of three accounts:
Raw Materials Inventory,
Factory Labor, and
Manufacturing Overhead
Debit What Comes In……Credit What Goes Out.
How often do we recognize Manufacturing Overhead?
Manufacturing overhead costs may be
recognized daily.
Or, manufacturing overhead may be recorded periodically through a summary entry.
What is a Job Cost Sheet?
A job cost sheet is a form used to record the costs
chargeable to a specific job and to determine the total and unit costs of the completed job.
What is a Subsidiary Ledger?
The job cost sheets constitute the subsidiary ledger for the Work in Process Inventory account. A
subsidiary ledger consists of individual records for each individual item—in this case, each job.
What is the Work In Process Account?
The Work in Process account is referred to as a control account because it summarizes the detailed data regarding specific jobs contained in the job cost sheets.
Each entry to Work in Process Inventory must
be accompanied by a corresponding posting to one or more job cost sheets.
What is a Materials Requisition Slip?
Companies assign raw materials costs to jobs when their materials storeroom issues the materials in response to requests.
Requests for issuing raw materials are made on a pre-numbered materials requisition slip.
What is a Time Ticket?
Companies assign factory labor costs to jobs on the basis of time tickets prepared when the work is performed.
The time ticket indicates the employee, the
hours worked, the account and job to be charged, and the total labor cost.
What is the control account for all unfinished job cost sheets?
Recognize that Work in Process Inventory is the control account for all unfinished job cost sheets.
When and how do we debit materials, labor and overhead?
Debit Work in Process Inventory for the materials, labor, and overhead charged to the job cost sheets.
What is a predetermined overhead rate?
The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity, expressed in terms of a common activity base.
Estimated Annual Overhead Costs, Divided By Expected Annual Operating Activity, Equals
Predetermined Overhead Rate (%)
What reconciles the balance in the Work In Process Inventory Account at the end of each month?
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At the end of each month, the balance in Work in Process Inventory should equal the sum of the costs shown on the job cost sheets of unfinished jobs.
Explain Predetermined Overhead Rate?
Predetermined overhead rate is estimated annual overhead cost divided by expected annual operating
activity.
How do we assign overhead to jobs in progress?
Assignment of overhead to jobs is determined by multiplying the actual activity base used by the predetermined overhead rate.
What is the journal entry for assignment of overhead?
The entry to record the assignment of overhead transfers an amount out of Manufacturing Overhead into Work in Process Inventory.
What is the Finished Goods Account?
Finished Goods Inventory is a control account. It controls individual finished goods records in a finished goods subsidiary ledger.
