1. What is a job cost sheet?

A job cost sheet is a financial document used in cost accounting to track and record the direct
costs associated with a specific job or project. It typically includes the following information:

- Job or project identification (job number, name, or description)

- Direct materials cost

- Direct labor cost

- Direct expenses

- Overhead allocation

The job cost sheet helps management track the actual costs incurred for a job and compare
them to the estimated or budgeted costs. This information is crucial for accurate job costing,
pricing, and profitability analysis.

2. Explain briefly: (a) actual factory overhead (b) applied factory overhead.
(a) Actual Factory Overhead:

Actual factory overhead refers to the real or incurred costs of the indirect resources and
expenses required to operate a manufacturing facility. These include items like indirect
materials, indirect labor, utilities, depreciation, rent, and other manufacturing-related
expenses.

(b) Applied Factory Overhead:

Applied factory overhead refers to the amount of overhead costs that are allocated or assigned
to the production of goods or services during a specific period. This is an estimated or
predetermined amount, based on a predetermined overhead rate and the actual activity level
(such as direct labor hours or machine hours) in the production process.

3. Can predetermined overhead rates be used in process costing?

Yes, predetermined overhead rates can be used in process costing. In process costing, the
predetermined overhead rate is calculated based on the estimated total factory overhead costs
and the expected activity level for the period. This rate is then used to apply or "burden" the
overhead costs to the units produced in each process.
4. What is the function of work in process (WIP) account in job order costing
system?
In a job order costing system, the work in process (WIP) account serves as a holding account for
the costs incurred during the production of a specific job or project. The WIP account is used to
accumulate and track the direct materials, direct labor, and applied factory overhead costs
associated with each individual job.

The key functions of the WIP account in a job order costing system are:

- Accumulating the costs incurred for each job as it moves through the production process

- Providing a record of the costs associated with unfinished jobs at the end of an accounting
period

- Facilitating the transfer of completed jobs from the WIP account to the finished goods
inventory

The WIP account allows the company to maintain a detailed record of the costs incurred for
each job, which is essential for accurate job costing and profitability analysis.

5. What is the primary objective in job order costing system?

The primary objective in a job order costing system is to accurately determine the cost of each
individual job or project. This information is crucial for the following purposes:

- Pricing decisions: The job cost information is used to set appropriate selling prices for the
products or services provided.

- Profitability analysis: The job cost data allows the company to analyze the profitability of each
individual job or project.

- Decision-making: The detailed job cost information helps management make informed
decisions about resource allocation, bidding on new projects, and identifying areas for cost
control and efficiency improvements.

By accurately tracking and accumulating the costs associated with each job, the job order
costing system provides the necessary information for effective cost management and strategic
decision-making within the organization.

6. Compare the cost accumulation & summarizing procedures of job order &
process costing:
Job Order Costing:

- Costs are accumulated and tracked for each individual job or project using job cost sheets.

- Direct materials, direct labor, and applied factory overhead are assigned to specific jobs.

- The total cost of each job is determined by adding the direct costs and the allocated overhead.

- The costs are summarized and reported for each individual job or project.

Process Costing:

- Costs are accumulated and assigned to the production processes, rather than individual jobs.

- Direct materials, direct labor, and factory overhead are accumulated for each production
process.

- The costs are then averaged across the units produced in each process to determine the unit
cost.

- The costs are summarized and reported for each production process, rather than individual
jobs.

The key difference is that job order costing focuses on the individual job or project, while
process costing focuses on the production processes. This reflects the different production
environments and the need for cost information in each system.

7. How is the control over prime costs achieved in job-order costing system?
In a job-order costing system, control over prime costs (direct materials and direct labor) is
achieved through the use of job cost sheets. These sheets provide detailed information on the
direct materials and direct labor costs incurred for each specific job, allowing for better
monitoring and control of these costs.

The specific ways in which job-order costing system achieves control over prime costs include:

1. Direct Materials:

- Job cost sheets track the quantity and cost of direct materials used for each job.

- Material requisition forms are used to document the withdrawal of materials from the
storeroom.
- Variances between actual and standard material costs can be identified and investigated.

2. Direct Labor:

- Job cost sheets record the actual hours worked and the labor rates for each job.

- Time tickets or time cards are used to document the time spent by workers on each job.

- Variances between actual and standard labor costs can be analyzed and addressed.

By maintaining detailed records of the direct materials and direct labor costs for each job, the
job-order costing system enables management to exercise tight control over these prime costs.
This information is crucial for cost management, pricing decisions, and profitability analysis.

8. What is factory overhead?

Factory overhead, also known as manufacturing overhead or indirect manufacturing costs,

refers to the costs incurred in the production of goods or services that are not directly traceable
to the final product. These are the indirect costs associated with the manufacturing process,
which cannot be easily or economically assigned to specific units or jobs.

Factory overhead typically includes the following types of costs:

1. Indirect materials: Materials used in the production process that are not directly traceable to
the final product, such as lubricants, cleaning supplies, and maintenance materials.

2. Indirect labor: Wages and salaries of production-related personnel who do not directly work
on the product, such as supervisors, maintenance workers, and quality control inspectors.

3. Utilities: Costs of electricity, water, gas, and other utilities used in the manufacturing facility.

4. Depreciation: Depreciation of production equipment, buildings, and other manufacturing-

related assets.

5. Rent and insurance: Costs associated with the manufacturing facility, such as rent, property
taxes, and insurance.

6. Maintenance and repairs: Costs of maintaining and repairing production equipment and
facilities.

The accurate estimation and allocation of factory overhead costs are crucial for determining the
true cost of production and ensuring the profitability of the business.
9. Name four control accounts concerned primarily with cost determination.

The four control accounts primarily concerned with cost determination are:

1. Raw Materials Control Account

- This account tracks the purchase, usage, and balance of raw materials inventory.

2. Work-in-Process Control Account

- This account records the accumulation of direct materials, direct labor, and applied factory
overhead for unfinished goods.

3. Finished Goods Control Account

- This account records the transfer of completed goods from the work-in-process account and
the subsequent sale of finished products.

4. Cost of Goods Sold Control Account

- This account records the cost of goods that have been sold, which is transferred from the
Finished Goods Control Account.

These control accounts are essential for the accurate determination of product costs, inventory
valuation, and the calculation of cost of goods sold. They provide the necessary information for
cost management, pricing decisions, and financial reporting.