exam 2- incomplete

Question 1

objective of a cost accounting system- job order cost system

Answer 1

to compute cost per job measures costs for each job completed- not for set time period

Question 2

what does a job order cost system do

Answer 2

assign costs to each job or batch of goods - each job or batch has its own distinguishing characteristics

Question 3

what are the flow of costs parallels physical flow of material as they are converted into finished goods

Answer 3

manufacturing costs are assigned to work in progress inventory(WIP)
cost of completed jobs is transferred to finished goods inventory
when units are sold, cost is transferred to cost of goods sold

Question 4

what are the 3 goals of factory labor costs/ accumulating manufacturing costs

Answer 4

1. gross earnings of factory workers
2. employers’ payroll taxes on these wages
3. fringe benefits( sick pay, pensions, and vacation pay) incurred by the employer

Question 5

what are some types of manufacturing overhead costs

Answer 5

property taxes, depreciation, insurance, and repairs related to the manufacturing process

Question 6

how are costs unrelated to manufacturing expensed

Answer 6

expensed as period costs

Question 7

assign manufacturing costs( debits and credits) to work in process

Answer 7

1. debits made to work in process inventory
2. credits made to - raw materials inventory, factory labor, manufacturing overhead

Question 8

where are costs related to manufacturing process accumulated

Answer 8

accumulated in manufacturing overhead account- MOH subsequently assigned to work in process

Question 9

assigned to a job when materials are issued from the materials store room in response to requests

Answer 9

raw materials costs

Question 10

materials requisition slip

Answer 10

-written authorization for issuing raw materials
- may be directly issues to use on job- direct materials( charged to work in process inventory)
- may be considered indirect materials- charger to manufacturing over head

Question 11

pre determined over head rate

Answer 11

-established at the beginning of the year
small companies often use a single company-wide predetermined rate
- large companies often use rates that vary from department to department

Question 12

pre determined over head rate equation

Answer 12

estimated annual cost / estimated annual operating activity= pre determined overhead rate

Question 13

what does a predetermined overhead rate do to the general ledger

Answer 13

entry reduces the balance in manufacturing overhead and increases work in process inventory

Question 14

what is underapplied manufacturing overhead

Answer 14

a debit balance in manufacturing overhead

Question 15

what is an overapplied balance in manufacturing overhead

Answer 15

a credit balance in manufacturing overhead

Question 16

how do you eliminate any year end balance

Answer 16

adjust COGS,
underapplied overhead is debited
overapplied overhead is credited

Question 17

what is activity based costing

Answer 17

approach for allocating overhead costs
- allocates overhead to multiple activity cost pools
- assigns the activity cost pools to products or services by means of cost drivers

Question 18

what is an activity

Answer 18

any event action, transactionn, work sequence that incures costs when producing a product or performing a service

Question 19

what is an activity cost pool

Answer 19

the overhead cost sttributed to a distinct activity- such as ordering materials or setting up machines

Question 20

what is a cost driver

Answer 20

any factor or activity that has a direct cause-effect relationship with the resources consumed

Question 21

what are the 4 steps of activity based costing

Answer 21

1 identify and classify the activities involved in the manufacturing of specific products and assign overhead to cost pools
2. identify the cost driver that has a strong correlation to the costs accumulated in each ost pool and estimate total annual cost driver usage
3. compute the activity based overhead rate for each cost pool
4. assign overhead costs to products using the overhead rates determined fo each cost pool and each products use of each cost driver

Question 22

how do you solve for activity based overhead rate

Answer 22

estimated overhead per activity / estimated use of cost drivers per activity= activity based overhead rate

Question 23

what the the 3 benefits of ABC

Answer 23

1. more cost pools therefore more accurate product costing
2. enhance control over overhead costs
3. supports better management decisions

Question 24

what are advantages of multiple cost pools

Answer 24

• used instead of one plantwide pool and a single cost driver
• numerous activity cost pools with more relevant cost drivers
  – - costs allocated on basis of cost drivers used to produce each product