Chapter 3 Job-Order Costing
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1. 3 types of costs in Cost of
Goods Manufactured
2. Allocation Base
3. Allocation base is a ___ that
causes overhead
4. Applied Overhead =
5. Charge ____ and ____ to each
job as work is performed
6. Costs of goods manufactured
7. Costs of goods manufactured
8. Examples of companies that
would use job-order costing
9. Finished Goods
10. Job-order costing systems are
used when... (3)
11. Manufacturing overhead,
including indirect materials
and indirect labor, are _____ to
all jobs rather than directly
traced to each job.
12. Measuring Direct Labor Costs
13. Measuring Direct Materials
Cost
1. direct materials
2. direct labor
3. manufacturing overhead
used to assign
manufacturing overhead to
individual jobs
ex) direct labor hours, direct
labor dollars, machine
hours
cost driver
POHR x Actual Direct
Labor Hours
direct material and direct
labor
...
the manufacturing costs
associated with the goods
that were finished during the
period
1. Boeing (aircraft
manufacturing)
2. Bechtel International
(large scale construction)
3. Walt Disney Studios
(movie production)
consists of completed units
of product that have not
been sold to customers
1. Many different products
are produced each period.
2. Products are
manufactured to order.
3. The unique nature of each
order requires tracing or
allocating costs to each
job, and maintaining cost
records for each job.
allocated
Hrs completed x Hrly rate =
Amount
Quantity x Unit Cost = (sum)
Total Cost
14. Non- not assigned to individual jobs, they are
manufacturing expensed in the period incurred
Costs ex)
1. salary expense of employees who work in
a marketing, selling, or administrative
capacity
2. Advertising expenses are expensed in the
period incurred
15. Overapplied when the amount of overhead applied to
overhead jobs during the period using the
predetermined overhead rate is GREATER
THAN the total amount of overhead
actually incurred during the period
16. POHR = Estimated total manufacturing overhead
cost for the coming period / Estimated
total units in the allocation base for the
coming period
17. POHR that 1. actual overhead for the period is not
rely upon known until the end of the period, thus
estimated data inhibiting the ability to estimate job costs
are often used during the period.
because: 2. Actual overhead costs can fluctuate
seasonally, thus misleading decision
makers.
18. Predetermined used to apply overhead to jobs
Overhead
Rate (POHR)
19. Raw materials any materials that go into the final product
20. Schedule of 1. calculates the manufacturing costs
Cost of Goods associated with goods that are finished
Manufactured during the period.
2. calculates the cost of raw material and
direct labor used in production and the
amount of manufacturing overhead applied
to production
21. Underapplied when the amount of overhead applied to
Overhead jobs during the period using the POHR is
LESS THAN the total amount of overhead
actually incurred during the period
22. We use an 1. It is impossible or difficult to trace
allocation overhead costs to particular jobs.
base because: 2. Manufacturing overhead consists of
many different items ranging from the
grease used in machines to the production
manager's salary
3. Many types of manufacturing overhead
costs are fixed even though output
fluctuates during the period.
23. Work in consists of units of production that are only partially complete and will require further work before they are ready for
Process sale to customers.