Chapter 2
Job Order Costing
Assignment Classification Table

Learning Objectives

Questions

Brief
Exercises

Do It!

Exercises

A
Problems

B
Problems

1. Explain the characteristics and purposes of cost accounting. 1, 2, 3, 4

2. Describe the flow of costs in a job order costing system.

5, 6, 7, 8

1, 2

1

1, 2, 3, 4, 6, 7, 8, 9, 11

1A, 2A,
3A, 5A

1B, 2B,
3B, 5B

3. Explain the nature and importance of a job cost sheet.

9, 10,
11, 12

3, 4, 5

2

1, 2, 3, 6, 7,
8, 10, 12

1A, 2A,
3A, 5A

1B, 2B,
3B, 5B

4. Indicate how the predetermined overhead rate is determined and used.

13, 14, 15

6, 7

2

2, 3, 5, 6, 7, 8, 11, 12, 13

1A, 2A, 3A,
4A, 5A

1B, 2B, 3B,
4B, 5B

5. Prepare entries for jobs completed and sold.

16

8, 9

3

2, 3, 6,
7, 8, 9,
10, 11

1A, 2A,
3A, 5A

1B, 2B,
3B, 5B

6. Distinguish between under- and overapplied manufacturing overhead.

17, 18

10

4

4, 5, 12, 13

1A, 2A,
4A, 5A

1B, 2B,
4B, 5B

ASSIGNMENT CHARACTERISTICS TABLE

Problem
Number

Description

Difficulty
Level

Time
Allotted (min.)

1A

Prepare entries in a job order cost system and job cost sheets.

Simple

3040

2A

Prepare entries in a job order cost system and partial income statement.

Moderate

3040

3A

Prepare entries in a job order cost system and cost of goods manufactured schedule.

Simple

3040

4A

Compute predetermined overhead rates, apply overhead, and calculate under- or overapplied overhead.

Simple

2030

5A

Analyze manufacturing accounts and determine missing amounts.

Complex

3040

1B

Prepare entries in a job order cost system and job cost sheets.

Simple

3040

2B

Prepare entries in a job order cost system and partial income statement.

Moderate

3040

3B

Prepare entries in a job order cost system and cost of goods manufactured schedule.

Simple

3040

4B

Compute predetermined overhead rates, apply overhead, and calculate under- or overapplied overhead.

Simple

2030

5B

Analyze manufacturing accounts and determine missing amounts.

Complex

3040

LEARNING OBJECTIVES 1. EXPLAIN THE CHARACTERISTICS AND PURPOSES OF COST ACCOUNTING. 2. DESCRIBE THE FLOW OF COSTS IN A JOB ORDER COST ACCOUNTING SYSTEM. 3. EXPLAIN THE NATURE AND IMPORTANCE OF A JOB COST SHEET. 4. INDICATE HOW THE PREDETERMINED OVERHEAD RATE IS DETERMINED AND USED. 5. PREPARE ENTRIES FOR JOBS COMPLETED AND SOLD. 6. DISTINGUISH BETWEEN UNDER- AND OVERAPPLIED MANUFACTURING OVERHEAD.
CHAPTER REVIEW

Cost Accounting Systems

1. (L.O. 1) Cost accounting involves the measuring, recording, and reporting of product costs. From the data accumulated, both the total cost and unit cost of each product is determined.

2. A cost accounting system consists of accounts for the various manufacturing costs. These accounts are fully integrated into the general ledger of a company. An important feature of a cost accounting system is the use of a perpetual inventory system. Such a system provides information immediately on the cost of a product. The two basic types of cost accounting systems are
(a) a job order cost system and (b) a process cost system.

3. Under a job order cost system, costs are assigned to each job or to each batch of goods.

4. A process cost system is used when a large volume of similar products are manufactured. Process costing accumulates product-related costs for a period of time instead of assigning costs to specific products or job orders.

Job Order Cost Flow

5. (L.O. 2) The flow of