Statement 1:In job order costing, unit costs are computed by dividing the individual departments costs by the equivalent productionStatement 2:In process costing, unit costs are determined by dividing the total costs on the job sheet by the number of units on the job

INTRODUCTION TO COST ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Statement 1:In job order costing, unit costs are computed by dividing the individual department’s costs by the equivalent productionStatement 2:In process costing, unit costs are determined by dividing the total costs on the job sheet by the number of units on the job

A	True; True
B	True; False
C	False; True
D	False; False

Explanation:

Detailed explanation-1: -What is job order costing and process costing? Job order costing is a costing system in which each product or job has traceable costs. Process costing is a costing system in which a product is mass produced, so costs are determined by equivalent units produced.

Detailed explanation-2: -The correct answer is D. Job-order costing is mainly used in firms with custom product and services such as a video production company. Job order costing refers to a system for assigning and accumulating manufacturing costs of an individual unit of output.

Detailed explanation-3: -Job costing is used when a business entity carries out tasks or jobs to meet specific customer orders. Batch costing is similar to job costing in that each batch of similar articles is separately identifiable.

Detailed explanation-4: -Multiply the payroll day rate by the amount of time you estimate you’ll need to complete the job. If you’ll rely on subcontractors for work your company doesn’t complete itself, factor those costs into your total labor costs for the job. It can help to get an estimate from each of these contractors.

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