Chapter 3: Job Order Costing

Question 1

When do you use process costing

Answer 1

homogenous products/services
-> when you have many identical products and services

Question 2

How are process costing costs calculated

Answer 2

Divviding total process costs by units produced in that period to GET AN AVERAGE COST

Question 3

When do you use job order costing

Answer 3

Distinct, identifiable products and services
-> EX: A custom made yacht
-> EX: an antique store

Question 4

How is job order costing don

Answer 4

Costs are totaled by job or batch and the units costs are calculated by dividing total job cost by units produced in that job

AS MANY COSTS TO PRODUCT AS POSSIBLE ARE TRACED TO EACH JOB

Question 5

Why do we do this? why do we determine unit costs

Answer 5

Financial Statement

Planning/Contorlling functions

Decision Making

Question 6

Actual Costing

Answer 6

Actual DM, Actual DL, Actual MOH

Question 7

What are we doing with normal costing?

Answer 7

DM- Actual Costs
DL- Actual Costs
MOH- Applied costs

Question 8

what are different ways to do job order costing

Answer 8

actual, normal, and standard

Question 9

What is applied MOH

Answer 9

It is the charge out rate, or THE PREDETERMINED MOH RATE

-> This is the estimated MOH rate

Estimated total MOH costs of period/ Estimated Total Unit in Base

What is the base? activity or allocation base (cost driver) WHICH WOULD IDEALLY RESULT IN MOH COSTS TO CHANGE IN PROPORTION TO THE BASE CHOSE

Question 10

It is relatively easy to cost DL-Applied costs and DM-Applied costs

Answer 10

the challenge rises in calculating manufacturing overhead

Question 11

Example of BASE

Answer 11

DLH: direct labour hours
MH: machine hours
DL $:Direct Labour Dollars

Whatever company feels will cause thee costs to increase or decrease

Question 12

Predetermined MOH rate * Actual amount of base

Question 13

Why do we use the applied MOH vs actual MOH

Answer 13

1. timeliness
2. avoids sasonabl fluctuations (utilies change in different period)
3. simplifies the accounting process (this is far easier!!! who wants to change this period over period)

Question 14

What is the Manufacturing overhead account?

Answer 14

It is a remporary account (at the end of the period it has a zero balance), it is used to calculate Applied MOH for WIP account

MOH, you DR. Actual | Cr. Applied

CR. Applied is (Predetermined MOH rate x Actual amount of cost driver)

Question 15

How to account for applied MOH

Answer 15

dr. WIP
cr. Manufactured overhead

Question 16

predetermined moh rate

Answer 16

Estimated total MOH costs of period/ Estimated total unit in base

Question 17

at the end of the acct period where are the job costs held

Answer 17

EITHER WORK IN PROCESS INVENTORY for incomplete goods

OR FINISHED GOODSS for complete and not yet sold

Question 18

JOB ORDER COST FLOW:

MANUFACTURING COSTS ARE ASSIGNED TO WORK IN PROCESS INVENTORY AS COSTS ARE INCURRED

Answer 18

completed jobs -> FG inventory

sold > COGS

Question 19

OKAY AYUSHI LOCK IN LISTEN TO ME RN!!!!! WHAT ARE THE TWO MAJOR STEPS IN FLOWS OF COSTS

Answer 19

1. ACCUMUALTE ALL MANUFACTURING COSTS AS INCURRED (RM,FL,MOH)
2. ASSIGN COSTS TO EACH SPECIFIC JOB OR UNIT

Question 20

Job order costing does NOT USE DM, DL,MOH

Answer 20

it uses RM, FL, APPLIED MOH

FL (consists of direct and inidirect labour costs)

Question 21

RM Inventory
A/P

FL
??

MOH
???

Question 22

WIP inventory
MOH
RM inv

—-> for direct & indirect materials

WIP inventory
MOH
FL

—-> for direct & indirect labour

Answer 22

learing out rm inv and FL

Question 23

basically, you can close out RM inv to MOH (indirect materials), AND to WIP (direct labour)

FL to MOH (indirect labour), AND to WIP (direct labour)

MOH to WIP

Question 24

offical 42+