Ch. 4 lecture

Question 1

are anything for which a cost measurement is desired

Answer 1

cost object

Question 2

of a cost object can be traced to that cost object in an economically feasible way

Answer 2

direct costs

Question 3

of a cost object are costs that cannot be traced in an economically feasible way

Answer 3

indirect costs (overhead)

Question 4

an original record that supports journal entries in an accounting system

Answer 4

source document

Question 5

charge direct materials and direct labor costs to each job as work is performed

Answer 5

tracing

Question 6

manufacturing overhead, including indirect materials and indirect labor, are ____ to all jobs rather than directly traced to each job

Answer 6

allocated

Question 7

a grouping of individual indirect cost items

Answer 7

cost pools

Question 8

simplify the allocation of indirect costs because the costing system does not have to allocate each cost individually

Answer 8

cost pool

Question 9

a systematic way to link an indirect cost or group of indirect costs to cost object

Answer 9

cost allocation base

Question 10

the cost object is a unit or multiple units of a distinct product or service which we call a job. each job generally uses different amounts of resoruces

Answer 10

job costing system

Question 11

the cost object includes massaes of identical or similar units of a product or service

Answer 11

process costing system

Question 12

in this type of system, we divide the total cost of production an identical or similar product or services by the total number of units produced to obtain a per unit cost

Answer 12

process costing system

Question 13

2 approaches to costing approach

Answer 13

1. actual cost
2. normal costing

Question 14

(which of the 2 costing approaches is this)
allocates indirect costs based on the actual indirect cost rates times the actual quantities of the cost allocation base

Answer 14

actual costing

Question 15

(which of the 2 costing approaches is this)
in order to use this method, jobs cannot be costed until the end of an accounting period when actual costs are known

Answer 15

actual costing

Question 16

(which of the 2 costing approaches is this)
allocates indirect costs based on the budgeted indirect cost rates times the actual quantities of the cost allocation base

Answer 16

normal costing

Question 17

(which of the 2 costing approaches is this)
this costing method allows us to use budgeted rates to get cost information throughout the year, instead of waiting until period end

Answer 17

normal costing

Question 18

both methods of costing use the same direct costs formula

Answer 18

actual rates * actual quantities of input

Question 19

1. identify the job that is the chosen cost object
2. identify the direct costs of the job
3. select the cost allocation base(s) to use for allocating indirect costs to the job
4. identify the indirect costs associated with each cost allocation
5. compute the rate per unit of each cost allocation base used to allocate indirect costs to the job (normal costing uses budgeted values)
6. compute the indirect costs allocated to the job
7. compute total job costs by adding all direct and indirect costs together

Answer 19

Job costing summary

Question 20

source document that records and accumulates all the costs assigned to a specific job, starting when work begins

Answer 20

job cost record
or
job cost sheet

Question 21

source document that contains information about the cost of direct materials used on a specific job and in a specific department

Answer 21

materials requisition record

Question 22

source document that contains information about the amount of labor time used for a specific job in a specific department

Answer 22

labor time sheet

Question 23

all of a compnays job cost sheets collectively form a

Answer 23

subsidiary ledger

Question 24

is a general ledger account containing only summary amounts
the details for each control account will be found in a related subsidiary ledger

Answer 24

control account

Question 25

under actual costing does overhead control = overhead allocated

Answer 25

yes

Question 26

under normal costing does overhead control = overhead allocated

Answer 26

no

Question 27

(normal costing) overhead control > overhead allocated

Answer 27

underallocated overhead

Question 28

(normal costing) overhead control < overhead allocated

Answer 28

overallocated overhead

Question 29

the difference between the overhead accounts will be eliminated in the end of period adjusting entry process, using on of 3 possible methods

Answer 29

1. write off approach 2. proration approach 3. adjusted allocation rate approach

Question 30

(which of the 3 ways to eliminate the difference between the overhead accounts at end of year adjusting entry process is this) the difference is simply written off to cost of goods sold

Answer 30

write off approach

Question 31

(which of the 3 ways to eliminate the difference between the overhead accounts at end of year adjusting entry process is this) the difference is allocated between cost of goods sold, work in process, and finished goods based on their relative sizes

Answer 31

proration approach

Question 32

(which of the 3 ways to eliminate the difference between the overhead accounts at end of year adjusting entry process is this) all allocations are recalculated with the actual, exact allocation rate

Answer 32

adjusted allocation rate approach