Chapter 3 PP: job order costing

Question 1

job order costing

Answer 1

A way to accommodate/record all costs that are associated with each specific job

job (or batch) has its own distinguishing characteristics (customized)

For example, each house is custom-built, each consulting engagement is unique, and each design and printing job is different

Question 2

is job order costing used by companies that mass manufacture the same products?

Answer 2

nah

It is for company that creates different “jobs” constantly, like different projects

Question 3

how does job order costing measure costs?

Answer 3

measures costs for each completed job, rather than for set time periods

Question 4

what are the types of products for the job order costing method?

Answer 4

Distinct products with low volumes

home building

shipbuilding

film production

aircraft manufacture

custom machining

furniture manufacture

printing

consulting

etc.

Question 5

how are the costs totaled in the job order costing method?

Answer 5

cost totaled by job or batch

Question 6

how are the unit costs per job or batch calculated with the job order cost system?

Answer 6

calculated by dividing total job costs by units produced

Question 7

when is the process cost system used (for chapter 4)

Answer 7

when a company manufactures a large volume of similar products

Question 8

what are the characteristics to the process cost system?

Answer 8

1. Homogeneous products with high volumes
2. Costs added by process or department
3. Unit cost calculated by dividing total process costs during the period by units produced during that period

Question 9

how to calculate the manufacturing costs in the job order costing system?

Answer 9

DM + DL + MOH

Question 10

in the job order cost system, what do you use to calculate how much material was used for a certain job?

Answer 10

material requisition slips

Question 11

material requisition slips

Answer 11

keeps the record of how much material is taken out of inventory and used for each job

Question 12

what do you use to calculate direct labor in the job order cost system?

Answer 12

time card slips

Question 13

what are the characteristics of MOH in the job order cost system?

Answer 13

Actual MOH will be determined near the end

Per job, there will be a predetermined rate of MOH

Question 14

predetermined rate of MOH

Answer 14

estimated amount of MOH

Question 15

how can you find the predetermined rate of MOH?

Answer 15

We can rely on past experiences

We can forecast

Question 16

what happens to manufacturing costs when work is started?

Answer 16

Manufacturing costs — > are assigned to — > work in process Inventory (WIP)

Question 17

what happens to costs when work is finished ?

Answer 17

Costs will be credited from WIP and will be assigned in Finished Goods Inventory

Question 18

what happens to costs when goods or inventory are sold?

Answer 18

Costs will be credited from Finished Goods and assigned to COGS (Cost of goods sold)

Question 19

what is the floe of documents in the job order cost system?

Answer 19

source documents –> Job cost sheet

Question 20

which are the source documents in the job order cost system?

Answer 20

material requisition slip

labour time tickets

predetermined overhead rates

Question 21

what are control accounts?

Answer 21

Control accounts (materials, labor and overhead, work-in-process, and finished goods) are inventory accounts