Exam 20: Costing Systems: Job Order Costing

When a job has been completed, all of the costs assigned to that job order are moved to the Finished Goods Inventory account.

Few actual production processes fit the definitions of job order costing or process costing exactly.

Companies that produce custom-made products usually use a process costing system.

When a job is completed in a service organization, the job costs are transferred to the

Pretty Pillows, Mfg., manufactures silk throw pillows. Last month the company produced 3,890 pillows. Using job order costing, determine the product unit cost for one pillow based on the following costs: production facility utilities, $1,600; depreciation on production equipment, $650; indirect materials, $400; direct materials, $5,300; indirect labor, $1,000; direct labor, $3,500; sales commissions, $4,000; president's salary, $8,000; insurance on production facility, $1,000; advertising expense, $900; rent on production facility, $6,000; rent on sales office, $4,000; and legal expense, $600. Carry your answer to two decimal places.

In a job order costing system, the transfer of overhead costs to the Work in Process Inventory account must take place before product unit costs can be computed.

The total of the dollar amounts on the job order cost cards that have not been completed would be equal to the

In a job order costing system, when the goods are sold, the Cost of Goods Sold account is increased, and the Finished Goods Inventory account is decreased for the selling price of the goods sold.