Job Order Costing

Give example of a cost driver.

A cost driver that could be used might be total direct hours.

The debit side of the Manufacturing Overhead account contains...

Actual manufacturing overhead costs

The credit side of the Manufacturing Overhead account contains.....

All applied manufacturing overhead

Actual manufacturing overhead includes...

All manufacturing related expenses that cannot be traced to specific jobs, including indirect materials used for the job site, site supervision, depreciation, etc.

The formula to calculate the predetermined overhead rate.

PDR= Estimated Total Manufacturing OH Costs/Estimated Total Cost Driver

List the 3 inventory accounts that are used to record manufacturing costs.

Raw Materials Inventory, Work in Process Inventory and Finished Goods Inventory

Overapplied manufacturing overhead...

Results from actual costs being less than applied costs

Underapplied manufacturing overhead....

Results from actual costs being less than applied costs

Underapplied overhead creates a (decrease) (increase) to cost of goods sold

Increase

What is the difference between job order an process costing?

Job order costing is used for construction of unique products and services and process costing is used for homogeneous products.

Overapplied overhead creates a (decrease) (increase) to cost of goods sold

Decrease

What company might use job order costing?

Toll Brothers when they build a custom home.