Job Order Costing - Chapter 15

Q&A flashcards covering key concepts from Chapter 15 Job Order Costing as presented in the lecture notes.

What is a cost object?

Anything we want to assign costs to (e.g., a job, product, department, or service), such as Job #245 for a client.

What are direct costs?

Costs that can be easily traced to one specific job, such as direct materials and direct labor.

What are indirect costs?

Costs that benefit many jobs and cannot be traced to a single job (e.g., factory rent, utilities).

What is Job Order Costing?

A costing system that assigns costs to individual jobs or orders as they are produced.

What is a job cost sheet?

A document that records and summarizes the costs charged to a specific job (materials, labor, overhead).

What are the main product cost flow stages in job order costing?

Raw materials inventory → Work in process inventory → Finished goods inventory → Cost of goods sold.

What is a materials receiving report?

The source document that records materials received from suppliers.

What is a materials ledger card?

A ledger card updated when materials are purchased and issued to production.

What is a materials requisition?

A document authorizing the use of materials in production.

What is a labor time ticket?

A document used to record the amount of direct labor hours and cost charged to a job.

What is a predetermined overhead rate (POHR)?

A rate used to apply overhead to jobs, based on a chosen cost driver (e.g., direct labor cost).

How is overhead applied to jobs?

Overhead applied = POHR × actual activity base used (e.g., direct labor cost).

What is the difference between overapplied and underapplied overhead?

Overapplied overhead occurs when applied overhead exceeds actual overhead; underapplied occurs when actual overhead exceeds applied. Both are closed at period end.

How does job order costing differ for service firms?

Service firms often have no raw materials or finished goods; they use supplies, and direct labor is used to apply overhead; accounts may include Services in Process Inventory and Services Overhead.

How is job order costing used in pricing services?

Costs for each job are tracked; total costs include labor and overhead and are used to price services.

What is the Schedule of Cost of Goods Manufactured (COGM)?

A schedule showing total manufacturing costs (direct materials, direct labor, manufacturing overhead) and the cost of goods manufactured for the period.

What are the main cost flow accounts linked to financial statements in job order costing?

Raw materials, Work in process, Finished goods, and Cost of goods sold, with overhead allocated via POHR to WIP/FG and adjusted at period-end.

What is an example of a POHR-based overhead application used in the notes?

Road Warriors uses a POHR based on direct labor cost to apply overhead to jobs.