Lecture 4 - Job Costing

Question 1

What is Job Costing?

Answer 1

Required where each unit or batch of output of a product or service is unique.
The cost of each job needs to be calculated separately
The costs assigned to one job may be different to the costs assigned to a different job

Question 2

Types of records kept for each job

Answer 2

Labour
Materials
Production overheads
Profit Margin
Selling, administration and distribution costs

Question 3

Process costing

Answer 3

Used in industries where masses of similar products are produced
Products are produced in the same manner and consume uniform costs and overheads
As each unit of output is exactly identical, each unit will be assigned exactly the same costs

Question 4

Job costing - Assigning costs to individual jobs

Answer 4

Identify the job that is the chosen cost object
Identify the direct costs of the job
Identify the indirect cost pools associated
Select the cost absorption base to be used in allocation
Develop the overhead absorption rate to be used to assign indirect costs to the job
Add up direct and indirect costs

Question 5

Two cost accounting systems

Answer 5

Integrated
Interlocking

Question 6

Integrated cost accounting system

Answer 6

Cost and financial
Preferred because it does not involve a duplication of accounting entries

Question 7

Interlocking cost accounting system

Answer 7

Cost operate
Financial separate

Question 8

3 types of valuation of the issue of materials

Answer 8

First in First out
Last in first out
Average cost

Question 9

First in First out

Answer 9

Assume that the goods which arrived first are issued first

Question 10

Last in first out

Answer 10

Assume that the goods which arrived last are issued first

Question 11

Average cost

Answer 11

assume that all goods are issued at average cost of inventory held