COST ACCOUNTING
JOB ORDER COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Manufacturing overhead is an indirect cost that is either impossible or difficult to trace to a particular job.
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Manufacturing overhead is incurred only to support some jobs.
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Manufacturing overhead consists of both variable and fixed costs.
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The average cost of actual fixed manufacturing overhead expenses will vary depending on how many units are produced in a period.
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Detailed explanation-1: -Manufacturing overhead is not incurred or expensed for the support of some activities. These are incurred for all the jobs or work that has been done or executed by the organization.
Detailed explanation-2: -The activity used to allocate manufacturing overhead costs to jobs is called an allocation base. The goal is to allocate manufacturing overhead costs to jobs based on some common activity, such as direct labor hours, machine hours, or direct labor costs. Organizations use various other types of allocation bases.
Detailed explanation-3: -Manufacturing overhead (MOH) cost is the sum of all the indirect costs which are incurred while manufacturing a product. It is added to the cost of the final product along with the direct material and direct labor costs.
Detailed explanation-4: -The most common allocation bases are direct labor hours, direct labor costs, and machine hours.