Video - Job Costing & Overhead

Question 1

job order costing

Answer 1

used for production of large, relatively expensive, heterogeneous (custom ordered) items

costs are accumulated by job which usu means grouping costs by customer

Question 2

process costing

Answer 2

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

costs are accumulated by process, which usu means grouping costs by department or operation

Question 3

overhead costs

Answer 3

since OH costs are not associated directly with specific units of production, an estimated OH amount is applied to production based on a predetermined formula

Question 4

overhead allocation and disposal (3 step process)

Answer 4

1. Beginning of year, calculate the predetermined OH rate:
   Budgeted OH Costs / Estimated Cost Driver Activity Level
2. Allocate (apply) OH by multiplying actual units of allocation base
3. dispose of over/under applied OH. take the difference between allocated OH and actual OH to COGS

Question 5

3 different types of OH

Answer 5

estimated
applied
actual

Question 6

The journal entry to allocate OH for a manufacturing organization is:

Answer 6

DR WIP

CR Factory OH Applied