Chapter 2; Job Order Costing

When direct factory labor is assigned to jobs, the entry is:

A debit to Work in Process Inventory A credit to Factory Labor

Manufacturing overhead is under applied if:

Actual overhead is greater than applied overhead.

Manufacturing overhead is under applied if:

Actual overhead is less than applied overhead.

In recording the issuance of raw materials in a job order costing system, you would:

Debit Work in Process Inventory Debit Manufacturing Overhead Credit Raw Materials Inventory

The formula for computing the predetermined manufacturing overhead rate is:

Estimated Annual Overhead Costs divided by Expected Annual Operating Activity expressed as direct labor cost, direct labor hours or machine hours.

When incurred, factory labor costs are debited to:

Factory labor.

At the end of an accounting period, a company using a job order cost system calculates the cost of goods manufactured:

From the Work in Process Inventory account.

A company is more likely to use a job order cost system if:

It manufactures products with unique characteristics.

The flow of cost in jobs order costing:

Job order costing parallels the physical flow of materials as they are converted into finished goods.

The source of information for assigning costs to job cost sheets are:

Materials requisition slips, time tickets, and the predetermined overhead rate.

In accumulating raw materials costs, companies debit the cost of raw materials purchased in a perpetual system to:

Raw Materials Inventory. In a perpetual system, purchases of raw materials are debited to raw materials inventory.

Cost accounting involves:

The measuring, recording and reporting of Product Costs.

Raw materials are assigned to a job when:

the materials are issued by the materials storeroom.