Chapter 5 Flashcards
(20 cards)
What is the primary difference between job costing and process costing?
Job costing is used for distinct products (e.g, food and beverage companies) while process costing is for identical units produced through a series of processes (e.g., electricians,
lawyers, accountants, auto repair shops, …etc).
In a job cost system, how are direct material costs assigned to jobs?
Based on the actual direct materials consumed as determined from the materials requisition form.
How are direct labor costs assigned to jobs in a job cost system?
Based on the actual direct labor used, calculated as hours x wage rate from the labor time sheet.
What is the first step in allocating overhead costs in a job cost system?
Compute a predetermined overhead rate by dividing total estimated overhead by the estimated quantity of an allocation base.
What is an allocation base?
The factor that causes overhead costs, such as labor hours in labor-intensive settings or machine hours in capital-intensive settings.
How is overhead allocated to jobs in a job cost system?
By multiplying the predetermined overhead rate by the actual quantity of the allocation base used on the job.
What happens to over- or under-allocated overhead at the end of the period?
It is determined to adjust cost of goods sold; underallocated increases cost of goods sold, and overallocated decreases it.
Fill in the blank: Job costing is typically used by companies that produce ________ products.
distinct
Fill in the blank: In a labor-intensive manufacturing setting, the number of ________ hours is an appropriate allocation base for overhead costs.
labor
True or False: Process costing is suitable for companies that produce unique products tailored to customer specifications.
False
A _______ shows the accumulation of the costs of an individual job.
job cost record
_____ is used by companies that produce small quantities of many different products.
Job costing
_____ is the primary factor that causes costs
Cost Driver
Resolute Forest Products pulverizes wood into pulp to manufacture cardboard. The company would use a ______ system
process costing
To record costs of maintaining thousands of identical mortgage files, financial institutions such as Mortgage Alliance Company of Canada would use a __________ system
process costing
______ is assigning direct costs to cost objects
Cost tracing
Companies that produce large numbers of identical products use _______ systems for product costing
process costing
The computer repair service that visits your home and repairs your computer would use a _____system
Job costing
A __________ is manufacturing personnel’s request that materials be moved to the production floor.
materials requisition
_______ is assigning indirect cost objects
Cost allocation
