Question 1

2 types of costing methods

Accepted Answer

1. job order system 
2.process cost system

Question 2

Characteristics of job order system

Accepted Answer

company assigns cost to each job or each batch of goods. goods often specialized per customer order. one work in process account is used to track the cost for a job. the objective is to COMPUTE THE COST PER JOB

Question 3

Characteristics of process cost system

Accepted Answer

company manufactures large volumes of similar products. production is continuous, products are homogenous. cost is tracked through a series of connected processes or department, not by jobs or batches. cost accumulation focuses on a PEROID OF TIME

Question 4

Job cost sheet

Accepted Answer

a form used to record the cost chargeable to a specific job. This form collects the total cost and the unit cost of the completed job. Company's complete separate job cost sheet for each job.

Question 5

job cost sheet summarizes.....

Accepted Answer

1. Direct materials 
2. direct labor 
3.Manufacturing overhead applied

Question 6

what provides support to job cost sheet

Accepted Answer

materials requestion slip and time tickets

Question 7

Predetermined overhead rate formula

Accepted Answer

Estimated Annual /Estimated Annual operating= predetermined overhead rate

Question 8

why do we need predetermined overhead rates

Accepted Answer

we can't determine an exact amount of certain items to apply. we must assign them timely because units are computed regularly

Question 9

Overhead costs

Accepted Answer

this account exists to accumulate indirect production costs that cannot be traced to specific jobs because these costs occur continuously while jobs finish at different times.

Question 10

3 types of overhead allocation methods

Accepted Answer

1. Plantwide 
2. Departmental 
3. activity based

Question 11

Characteristics of plantwide rate

Accepted Answer

uses one overhead rate. based on volume-based measures (direct labor hours, and machine hours). traditional costing approach. cost assignment is for the unit of the product

Question 12

characteristics of departmental rate

Accepted Answer

Has two or more overhead rates. Based on volume-based measures (direct labor hours and machine hours). Improves the accuracy of allocation and management decision making. Requires a three step process.

Question 13

Characteristics of activity-based costing

Accepted Answer

Many overhead rates. Based on actions that drive cost (cost per machine set-up, cost of material order, cost per design change, and cost per labor hour). More accurate product costing.

Question 14

cost driver

Accepted Answer

any factor that causes a change in the total cost of an activity, product, or service, and understanding it helps organizations allocate costs more accurately and improve decision‑making.

Question 15

activity cost pool

Accepted Answer

a temporary account that aggregates all costs associated with a specific activity, used to allocate overhead more accurately to products or cost objects.

Question 16

product cost

Accepted Answer

the total of direct materials, direct labor, and manufacturing overhead required to produce a product, typically recorded as inventory until the goods are sold.

Question 17

over-applied overhead

Accepted Answer

the overhead assigned to the work in process inventory are less than the overhead incurred. when this happens increase cost of goods sold expense.

Question 18

Over-applied overhead

Accepted Answer

the overhead assigned to work in process inventory are more than the overhead incurred. when this happens decrease cost of goods sold expense

accounting concepts

exam 2 concepts for accounting

Question	Answer
2 types of costing methods	1. job order system 2.process cost system
Characteristics of job order system	company assigns cost to each job or each batch of goods. goods often specialized per customer order. one work in process account is used to track the cost for a job. the objective is to COMPUTE THE COST PER JOB
Characteristics of process cost system	company manufactures large volumes of similar products. production is continuous, products are homogenous. cost is tracked through a series of connected processes or department, not by jobs or batches. cost accumulation focuses on a PEROID OF TIME
Job cost sheet	a form used to record the cost chargeable to a specific job. This form collects the total cost and the unit cost of the completed job. Company's complete separate job cost sheet for each job.
job cost sheet summarizes.....	1. Direct materials 2. direct labor 3.Manufacturing overhead applied
what provides support to job cost sheet	materials requestion slip and time tickets
Predetermined overhead rate formula	Estimated Annual /Estimated Annual operating= predetermined overhead rate
why do we need predetermined overhead rates	we can't determine an exact amount of certain items to apply. we must assign them timely because units are computed regularly
Overhead costs	this account exists to accumulate indirect production costs that cannot be traced to specific jobs because these costs occur continuously while jobs finish at different times.
3 types of overhead allocation methods	1. Plantwide 2. Departmental 3. activity based
Characteristics of plantwide rate	uses one overhead rate. based on volume-based measures (direct labor hours, and machine hours). traditional costing approach. cost assignment is for the unit of the product
characteristics of departmental rate	Has two or more overhead rates. Based on volume-based measures (direct labor hours and machine hours). Improves the accuracy of allocation and management decision making. Requires a three step process.
Characteristics of activity-based costing	Many overhead rates. Based on actions that drive cost (cost per machine set-up, cost of material order, cost per design change, and cost per labor hour). More accurate product costing.
cost driver	any factor that causes a change in the total cost of an activity, product, or service, and understanding it helps organizations allocate costs more accurately and improve decision‑making.
activity cost pool	a temporary account that aggregates all costs associated with a specific activity, used to allocate overhead more accurately to products or cost objects.
product cost	the total of direct materials, direct labor, and manufacturing overhead required to produce a product, typically recorded as inventory until the goods are sold.
over-applied overhead	the overhead assigned to the work in process inventory are less than the overhead incurred. when this happens increase cost of goods sold expense.
Over-applied overhead	the overhead assigned to work in process inventory are more than the overhead incurred. when this happens decrease cost of goods sold expense

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