Job Costing

Question 1

What is process costing?

Answer 1

Used to accumulate cost for mass-produced, continuous, homogeneous items that are often small and inexpensive

Costs are accumulated by process. This usually means grouping by department or operation

Question 2

Estimate overhead amounts is applied by a predetermined formula, called predetermined overhead rate?

Answer 2

TRUE

Question 3

What is the overhead allocation and disposal formula steps?

Answer 3

1) Calculate the predetermined overhead rate (POR)

Budgeted factor overhead costs / Estimate. cost driver activity level

2) Allocate overhead by multiplying “actual” units of the allocation base
3) Dispose of over/under applied overhead. Take. the difference between allocated OH and factual OH to COGS.