Unit 4: Job-order costing

if overhead variance is large, another approach would be taken. what would the overhead variance spread among

1. work in process ending inventory 2. finished goods ending inventory 3. cost of goods sold

What type of firms use job-order accounting system?

A company that sales products/services are unique

What type of firms use process-costing accounting system?

A firm that produces similar products or services

True or False In an actual cost system, actual direct materials, actual direct labor, and estimated overhead are used to determine unit cost.

False

two methods of assigning costs associated with production for job costing options are

actual costing normal costing

What does a normal cost system need to determine job cost by adding:

actual direct materials actual direct labor estimated overhead

underapplied overhead is _________ to cost of goods sold

added

for the multiple support departments, the reciprocal method recognized +______ interactions among support departments

all

How would you calculate the plant wide overhead rate?

all estimated overhead for a factory/estimated activity for the entire factory

How do you calculated the applied overhead?

applied overhead = predetermined overhead rate X actual activity level

in order to reconcile between differences in actual overhead and applied overhead then, we adjust __________ ___ ___________ __________to reflect actual overhead spending

cost of goods sold

What are some characteristics of job-order costing?

customized built-to-order products services that vary from customer to customer

time tickets are used only for ____________ ____________

direct labor

for multiple support departments, there are three methods for assigning support department costs to producing departments

direct method sequential method reciprocal method

managers need accurate cost information on materials, labor, and overhead for __________ __________

each job

Estimated overhead is the firm's best __________ of the amount of overhead to be incurred in the coming year

estimate

How do you calculated the predetermined overhead rate?

estimated annual overhead/ estimated annual activity level

a departmental overhead rate is calculated by

estimated overhead for a department/estimated activity level for that department

With normal costing, overhead can be applied and reconciled by

estimating the year's overhead at the beginning of the year calculating a predetermined allocation rate using the predetermined rate throughout the year reconciling allocated overhead with actual overhead

What are some examples of process manufactures?

food canning and manufacturing, paste, petroleum, chemical manufacturing

what is the sequential (or step) method recognizes interactions among support departments but does not ____________ account for support department interaction

fully

by definition, _____________ ___________ is not traceable to specific jobs

indirect labor

the cost of other materials, _______________ - are assigned to jobs through the predetermined overhead rate although it is __________ on the material requisition form

indirect materials, not

data from time tickets are posted to ________________ jobs

individuals

the document that lists the total cost for a single job is a

job order cost sheet

Estimated activity is the cost driver may be the estimated number of _____________, ________, and ________ ______

labor hours, machine hours, parts installed

What are uneven overhead costs?

many overhead costs are not incurred uniformly throughout the year

the ___________ ___________ form asks for the type, quantity, and unit price of direct materials issued and most importantly, the number of job

materials requisition

the cost of a direct materials is assigned to a job by using a ___________ _________ ____________

materials requisition form

what is the actual cost system?

only actual costs of direct materials, direct labor, and overhead are used to determine unit cost

if actual overhead is smaller than the applied overhead then the variance would be said to be ______________ overhead

overapplied

What are overhead costs?

overhead items that do not have a direct relationships with jobs produced, compared to direct materials, and direct labor

the difference between actual overhead and applied overhead is called an _____________ _____________

overheard variance

if overhead has been overapplied, then product cost has been _____________

overstated

_______________ ____________ are directly responsibly for creating the products or services sold to customers

producing departments

applied overhead ________ equals actual overhead

rarely

at the end of the year, we ___________ any difference between actual overhead and applied overhead

reconcile

the method that assigns support department costs by giving partial recognition to support department interactions is known as

sequential method

for the reciprocal methods, two or more support departments use ____________ provided by other support departments

services

Because of _____________ _________, strict actual cost systems are rarely used

several downsides

the multiple support departments, the reciprocal method fully accounts for support department interaction by using a system of

simultaneous linear equations

the reciprocal method is mathematical, but easily implemented using simple +________________ ________________-

spreadsheet technology

overapplied overhead is _______________ from cost of goods sold

subtracted

_____________ _______________ provide essential services for producing departments, but they do not actually make the product or service being sold

support departments

each day, an employee fills out a ____________ ___________ that identifies his or her name, wage rate, and the hours worked on each job

time ticket

the document for recording usage of direct labor costs traced to individual jobs is called

time ticket

How to calculate the total costs per job?

total costs per job = actual direct materials issued to job+actual direct labor used on job + overhead applied to job

How to calculate total job cost for year?

total job costs for year = actual direct materials issued to jobs + actual direct labor used on jobs + overhead applied to jobs

the balance of work in process at the end of the month is

total of all the job order cost sheets for every incomplete jobs

if actual overhead is bigger than the applied overhead then the variance is said to be ______________ overhead

underapplied

if overhead has been under-applied, then the product cost has been ___________

understated

what is the unit cost equation?

unit cost = process costs/output

the order that cost elements flow through accounts until they are recognized as an expense

work in process, finished goods, cost of goods sold