ECONOMICS

Detailed explanation-1: -In a job-order cost system, indirect labor is assigned to a job by using the labor time ticket as a source document. 6. The fact that one department may be labor intensive while another department is machine intensive may explain in part the existence of multiple predetermined overhead rates in larger companies.

Detailed explanation-2: -Any indirect material or indirect labor costs are debited to the Manufacturing Overhead control account, along with any other actual manufacturing overhead costs incurred during the period. Manufacturing overhead is applied to Work In Process using the predetermined rate.

Detailed explanation-3: -Direct labor is debited to the Work In Process inventory account and indirect labor is debited to the Manufacturing Overhead account.

Detailed explanation-4: -The entry to record the indirect material is to debit manufacturing overhead and credit raw materials inventory. Indirect labor records are also maintained through time tickets, although such work is not directly traceable to a specific job.

Detailed explanation-5: -Job order costing is used to measure the revenue gained against the expenses incurred during the production process so that we can determine the profit for every unique job which is being manufactured.