Week 8- Introduction to absorption costing

Question 1

What is job costing?

Answer 1

A job costing system is one where there are many uniquely identifiable products/services

Associated with a manufacturing business, and also used in the service sector

Question 2

What is a manufacturing overhead?

Answer 2

Costs other than material and labour which cannot be traced directly to products.

Question 3

What can be classed as manufacturing overheads in a manufacturing business?

Answer 3

Repair of machinery
Rent of factory buildings

Question 4

What can be classed as manufacturing overheads in a service business?

Answer 4

Cost of transport to jobs
Replacement of tools

Question 5

Production overhead costs comprises of what:

Answer 5

1- Indirect materials
2- Indirect labours
3- Production overhead cost

Question 6

What is variable costing?

Answer 6

Includes only variable cost (direct and indirect) in cost of product.

Question 7

What is full costing?

Answer 7

Includes direct cost (fixed and variable) in cost of product