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Chpt 4 Study Guide Cost Accounting

2786 words - 12 pages

Ch 4: "Job Costing"
 
A.            Ch 4 Learning Objective 1: Describe the building-block concepts of costing systems.
 
1.            LO 4-1 overview: The building-block concepts of a costing system are cost object, direct costs of a cost object, indirect costs of a cost object, cost pool, and cost allocation base. Costing systems should report cost numbers that reflect the way chosen cost objects, such as products or services, use the resources of the organization.
 
2.            Study pages 98-100.
 
3.            LO 4-1 lecture slides. Note: Look for the image of your instructor within the slides. Clicking on his smiling face will start a short lecture.
 
4.            Q1: ...view middle of the document...

 
The correct answer is "b," cost pool. The cost pool is what is to be allocated, not the allocation base. |
 
B.            Ch 4 Learning Objective 2: Distinguish job costing from process costing.
 
1.            LO 4-2 overview: Job-costing systems assign costs to distinct units of a product or service. Process costing involves broad averaging and assigns costs to masses of identical or similar products.
 
2.            Study pages 100-101.
 
3.            LO 4-2 lecture slides
 
4.            Q2: How does a job-costing system differ from a process-costing system?

In a job-costing system, costs are assigned to a distinct unit, batch, or lot of a product or service. In a process-costing system, the cost of a product or service is obtained by using broad averages to assign costs to masses of identical or similar units.
 
5.            Ex 16, p. 127. Job costing versus process costing. Solution
 
6.            A company that manufactures dentures for use by local dentists would use:
a.            process costing.
b.            personal costing.
c.            operations costing.
d.            job costing.
 
The correct answer is "d." This job would be custom made for one unique customer. |
 
C.           Ch 4 Learning Objective 3: Describe the approaches to evaluating and implementing job-costing systems.
 
1.            LO 4-3 overview: The main challenge of implementing job-costing systems is estimating actual costs in a timely manner. By timely manner, we mean relevant for decision-making.
 
2.            Study pages 102-104.
 
3.            LO 4-3 lecture slides
 
4.            Q3: Why might an advertising company use job costing for an advertising campaign by Pepsi, whereas a bank might use process costing to determine the cost of checking account deposits. 

An advertising campaign for Pepsi is likely to be very specific to that individual client. Job costing enables all the specific aspects of each job to be identified. In contrast, the processing of checking account withdrawals is similar for many customers. Here, process costing can be used to compute the cost of each checking account withdrawal.

 
5.            Q6: Describe three major source documents used in job-costing systems.

Three major source documents used in job-costing systems are:
(1) job cost record or job cost sheet, a document that records and accumulates all costs assigned to a specific job, starting when work begins
(2) materials requisition record, a document that contains information about the cost of direct materials used on a specific job and in a specific department; and
(3) labor-time sheet, a document that contains information about the amount of labor time used for a specific job in a specific department.

 
6.            Q15: Describe why Electronic Data Interchange (EDI) is helpful to managers.

Modern technology of electronic data interchange (EDI) is helpful to managers because it ensures that a...

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