Account Chapter 2 Essay

7350 Words Feb 12th, 2015 30 Pages
CHAPTER 17 (FIN MAN); CHAPTER 2 (MAN) JOB ORDER COSTING
EYE OPENERS
1. Product cost information is used by managers to (1) establish product prices, (2) control operations, and (3) develop financial statements. 2. a. Job order cost system and process cost system. b. The job order cost system provides a separate record of each quantity of product that passes through the factory. c. Process cost systems accumulate costs for each department or process within a factory. 3. Job order costing is used by firms that sell custom goods and services to customers. The job order system is frequently associated with firms that will produce a product or service specifically to a customer order. 4. No. A job order cost system is not appropriate because
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10. The sources of the debits to Work in Process are: a. Summary of the materials requisitions for direct materials. b. Summary of the time tickets for direct labor. c. Data obtained when applying the predetermined factory overhead rate for factory overhead. 11. The use of a predetermined factory overhead rate in job order cost accounting assists management in pricing jobs. By estimating the cost of direct materials and direct labor based on past experience and by applying the factory overhead rate, the cost of a job can be estimated. The predetermined rate also permits the determination of the cost of a job shortly after it is finished, which enables management to adjust future pricing policies to achieve the best combination of revenue and expense. 12. a. The predetermined factory overhead rate is determined by dividing the budgeted factory overhead for the forthcoming year by an estimated activity base, one that will equitably apply the factory overhead costs to the goods manufactured. b. Direct labor cost, direct labor hours, and machine hours. 13. a. (1) If the amount of factory overhead applied is greater than the actual factory overhead, factory overhead is overapplied. (2) If the amount of actual factory overhead is greater than the amount applied, factory overhead is underapplied. b. Underapplied c. Deferred credit

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14. The simplest satisfactory procedure for disposing of a relatively minor balance in the factory overhead account is to

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