Chapter 4

Question 1

A grouping of individual indirect cost items.
Simplify the allocation of indirect cost because the costing system does not have to allocate each cost individually

Answer 1

Cost Pool

Question 2

A systematic way to link an indirect cost or group of indirect costs to cost objects.

Answer 2

Cost- allocation base

Question 3

When the cost object is a job, product, service or customer, the cost allocation based is also called_________

Answer 3

Cost application base

Question 4

The cost object is a unit or multiple units of a distinct product or service called job.

Answer 4

Job- costing system

Question 5

The cost object is masses of identical or similar units of product or service

Answer 5

Process- costing

Question 6

Costing Approaches

Answer 6

1. Actual Costing
2. Normal Costing

Question 7

Allocates indirect costs based on the actual indirect cost rates times the actual quantities of the cost Allocation base

Answer 7

Actual Costing

Question 8

Allocates indirect costs based on the budgeted indirect cost rates times the actual quantities of the cost allocation base.

Answer 8

Normal Costing

Question 9

7 step job costing

Answer 9

1. Identify the job that is chosen cost object
2. Identify the direct cost objects of the job
3. Select the cost allocation base to use for allocating indirect cost to the job
4. Identify the indirect cost associated with each cost allocation base
5. Compute the rate per unit
6. Compute the indirect costs allocates to job

Question 10

The shorter the period, the greater is the influence of seasonal patterns on the amount of costs

Answer 10

The numerator reason( indirect-cost pool)

Question 11

Quantity of the cost allocation base

Answer 11

The denominator reason

Question 12

An original record that supports journal entries in an accounting system

Answer 12

Source document

Question 13

Also called job-cost sheet
It is used to record and accumulate all the costs assigned to a specific job, starting when work begins.

Answer 13

Job- cost record

Question 14

It contains information about the cost of direct materials used on a specific job and in a specific department.

Answer 14

Materials- requisition record

Question 15

It contains information about the amount of labor time use for a specific job.

Answer 15

Labot-time sheet

Question 16

Entries made at each step of the production process

Answer 16

Journal Entries

Question 17

The purpose is to have the accounting system closely reflect the actual state of the business, its inventories and its production process

Answer 17

Journal Entries

Question 18

Account in WIP process contro account

Answer 18

Direct materials
Direct Labor incurred
Factory Overhead allocated(or applied)

Question 19

Manufacturing overhead control account

Answer 19

Actual indirect costs(overhead)

Question 20

Actual cost will almost never equal budgeted cost. T/ F?

Answer 20

T

Question 21

If Overheard Control> Overhead Allocated, this is called

Answer 21

Underallocated overhead

Question 22

If Overheard control< Overhead Allocated, this is called

Answer 22

Overallocated Overhead

Question 23

3 method for adjusting Over/ underapplied overhead

Answer 23

1. Adjusted allocation rate approach
2. Poration approach
3. Write- off approach

Question 24

All allocations are recalculated with the actual exact allocation rate

Answer 24

Adjusted allocation rate approach

Question 25

The difference is allocated between COGS, WIP and Finished goods based on their relative sizes

Answer 25

Proration Approach

Question 26

The difference is simply written off to the COGS

Answer 26

Written- off approach

Question 27

It is often associated with the manufacturing sector but it is also very useful in service organizations

Answer 27

Job costing