Chapter 2

Question 1

When are Job-order costing systems used?

Answer 1

• Many different products are produced each period.
• Products are manufactured to order.
• The unique nature of each order requires tracing or allocating 
costs to each job, and maintaining cost records for each job

Question 2

Briefly describe Job-Order costing.

Answer 2

In job order costing, Direct Materials and Direct Labor are charged to each job as it is performed whereas Manufacturing Overhead (including indirect materials and indirect labor) is allocated rather than directly traced.

Question 3

Learning Objective 1

Answer 3

Compute a predetermined overhead rate.