ECONOMICS

Detailed explanation-1: -A process cost system is most appropriate when a large volume of uniform products are produced. Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job. Estimated manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.

Detailed explanation-2: -A normal job-order costing system is a system that uses: Actual costs for direct materials and direct labor and estimated costs for overhead. Actual overhead costs are not assigned directly to jobs.

Detailed explanation-3: -The commonly used allocation bases in manufacturing are direct machine hours and direct labor hours. Divide the manufacturing overhead costs by the allocation base to calculate the amount of manufacturing overhead that should be assigned to each unit of production.

Detailed explanation-4: -Actual overhead costs are not traced to jobs because the very nature of the overhead is indirect, i.e manufacturing overhead comprises of costs that cannot be directly traceable to finished goods or specific jobs. In order to assign them to jobs, they have to be allocated rather than being traced.

Detailed explanation-5: -Manufacturing overhead costs cannot be traced directly to a specific job. The requisition of factory supplies to production requires a debit to the Manufacturing Overhead account. Actual overhead costs are debited to the Manufacturing Overhead account.