Chapter 3 review Flashcards
if a manufacturing company acquires raw materials, to what account is the cost of raw materials purchased debited?
Raw materials inventory
At the point that manufacturing labour costs are incurred, to what account are they debited?
Factory labour
What is unique about the flow of costs in a Job order cost system?
each job is costed separately in a WIP subsidiary ledger
in a job order cost accounting system, the WIP account is
a control account
What is the formula to determine predetermined overhead rate?
Estimated overhead / cost base
calculate the predetermined overhead rate for the following using direct labour cost MOH 1,056,000 Dir Lab cost 264,000 Dir Lab hrs 12,000 Machine Hrs 75,000
(1,056,000 / 264,000) x 100
= 400%
What is the purpose of job cost accounting?
The purpose of job cost accounting is to determine the cost of jobs in order to determine which products to produce, what price to charge and the amounts to produce
Raw Materials were purchased on account
Dr: RW
CR AP
Issued a cheq to Estes machine shop for repair work on equipment
DR MOH
CR Cash
Direct materials were requisitioned for a job
DR WIP
CR RM
Factory labour was paid as incurred
DR FL
CR C
Recognized direct labour and indirect labour used
DR WIP, MOH
CR FL
The production department requisitioned indirect materials for use in the factory
DR MOH
CR RM
Overhead was applied to production base don a predetermined overhead rate
DR WIP
CR MO
Goods that were completed were transferred to finished goods
DR FG
CR WIP
