Lecture 3

Question 1

What does cost assigning encompass?

Answer 1

Cost tracing for direct costs to a cost object

Cost allocation for indirect costs to a cost object

Question 2

Factors affecting direct/indirect cost classification?

Answer 2

Materiality of the cost in question

Availability of information-gathering technology

Design of operations

Question 3

Job costing system?

Answer 3

Distinct unit of a product or service

Question 4

Process-costing system?

Answer 4

Masses of identical or similar units of a product or service

Question 5

Job costing examples in the service sector?

Answer 5

Accounting firm audits

Advertising agency campaign

Question 6

Job costing examples in the merchandising company sector?

Answer 6

Sending a catalogue to a mailing list

Special promotion of a new store product

Question 7

Job costing examples for a manufacturing sector company?

Answer 7

Aircraft construction

House construction

Question 8

Process costing examples for service sector?

Answer 8

Deposit processing

Postal delivery

Question 9

Process costing for merchandising sector?

Answer 9

Grain dealing

Processing new magazine subscriptions

Question 10

Process costing for manufacturing companies?

Answer 10

Oil refining

Beverages production

Question 11

cost object = ?

Answer 11

anything for which a separate measurement of costs is desired

Question 12

direct costs = ?

Answer 12

traceable costs to a particular cost object

Question 13

indirect costs = ?

Answer 13

costs of a cost object that aren’t traceable

Question 14

cost pool = ?

Answer 14

a grouping of individual cost items

Question 15

what are the two types of costing?

Answer 15

job costing
process costing

Question 16

job costing means…

Answer 16

to cost cost objects 1 by 1

usually done for personalised/custom-made goods/services

Question 17

process costing means…

Answer 17

to cost cost objects at mass in batches

usually done for homogenous goods in abundance

Question 18

first step of job costing?

Answer 18

identify the job that is the cost object

Question 19

step 2 of job costing?

Answer 19

identify the direct costs for the job

Question 20

step 3 of job costing?

Answer 20

identify the indirect cost pool associated with the job

Question 21

step 4 of job costing?

Answer 21

select cost allocation base for indirect costs

Question 22

step 5 of job costing?

Answer 22

develop rate per unit for indiret costs

Question 23

step 6 of job costing?

Answer 23

assign the costs to the cost object

Question 24

two types of job costing?

Answer 24

actual costing
normal costing

Question 25

normal costing?

Answer 25

provides managers with timely information

preferable in industries where production takes longer than the financial year

normal costing requires end of period adjustments for over/under allocated indirect costs

Question 26

direct materials stock = ?

Answer 26

stock that will be used in the manufacturing process

(e.g., computer chip components needed for mobile phones)

Question 27

work in process stock = ?

Answer 27

goods are partially worked on but not yet completed

AKA goods in progress

Question 28

finished goods stock = ?

Answer 28

goods completed but not yet sold

Question 29

two types of costs?

Answer 29

capitalised as assets (B/S)
expenses as incurred (P/L)