Job-order costing

Question 1

Difference between job and process costing?

Answer 1

Job costing = many different products produced each period, process costing = masses of similar products are produced

Question 2

Pre-determined OH rate?

Answer 2

A rate used to apply OH costs to products/services, based on the estimate of the total OH costs incurred during a specific period

Question 3

What is the process of assigning OHs to products?

Answer 3

1) allocation and apportionment of OHs to service/production cost centres, e.g. salary apportioned on the no. of employees

2) They are then ‘absorbed’ by production cost centres and are included in the final pricing of the product/service

Question 4

What info is needed for absorption?

Answer 4

OH cost for the period and productive capacity in the period

Question 5

What is the pre-determined OH/absorption rate formula?

Answer 5

Estimated OH costs for the period / estimated productive capacity for the period

Question 6

What is the pre-determined OH/absorption rate formula?

Answer 6

Estimated OH costs for the period / estimated productive capacity for the period