ECONOMICS

Detailed explanation-1: -Under a job order cost system, costs are accumulated for: Each batch of production, known as a job or lot. When a job is completed: Work-in-process inventory is credited.

Detailed explanation-2: -Costs accumulate on manufactured goods while they are in production. The three costs of production are direct materials, direct labor, and factory overhead. For unique products, each job accumulates different amounts of each of these three costs.

Detailed explanation-3: -Job order costing is a costing method which is used to determine the cost of manufacturing each product. This costing method is usually adopted when the manufacturer produces a variety of products which are different from one another and needs to calculate the cost for doing an individual job.

Detailed explanation-4: -When job order costing is used, costs are accumulated on a job cost sheet. Process costing averages the total cost of the process over the number of units produced. Source documents are used to assign all manufacturing costs to jobs. A materials requisition form is used to authorize the purchase of direct materials.

Detailed explanation-5: -Job-order costing is used for companies that produce different products each period. Costs are accumulated for each job. Process costing is used for companies that produce many identical units of a single product for long periods of time. Costs are accumulated for each manufacturing department.