Chapter 4: Job Costing

Question 1

What is a cost pool?

Answer 1

Grouping of individual indirect cost items.

Question 2

What is a cost-allocation base?

Answer 2

A cost driver that systematically allocates indirect costs.

Question 3

What is job costing?

Answer 3

Accumulating costs for unique cost objects.

Question 4

What is process-costing?

Answer 4

Assigning costs for mass produced products.

Question 5

What is actual costing?

Answer 5

Allocating cost based on actual cost rates.

Actual cost rate

x

Actual activity

Question 6

What is normal costing?

Answer 6

Allocating cost based on budgeted cost rates.

Budgeted cost rate

x

Actual activity

Question 7

How is the budgeted manufacturing overhead rate calculated?

Answer 7

Budgeted manufacturing overhead costs

/

Budgeted total quantity of cost-allocation base

Question 8

Where are all costs accumulated?

Answer 8

Work-in-process control account

Direct materials used

Direct labor incurred

Factory overhead allocated

Question 9

Where are actual indirect costs accumulated?

Answer 9

Manufacturing overhead control account

Question 10

What does underapplied overhead mean?

Answer 10

Overhead Actual > Overhead Applied

Question 11

What does overapplied overhead mean?

Answer 11

Overhead Actual < Overhead Applied

Question 12

What are the two methods for adjusting over/underapplied overhead?

Answer 12

• Write off difference to cost of goods sold
• Prorate difference between CGS, WIP, and finished goods based on ending balances

Question 13

What is the general approach to costing?

Answer 13

1. Id cost object
2. Id direct costs
3. Select cost-allocation bases
4. Id indirect costs associated with each cost-allocation base
5. Compute the rate per unit of each cost allocation based used
6. Compute the indirect costs allocated
7. Compute the total costs by adding all direct and indirect costs