Job Order Costing - Cost Flows

The video tutorial explains the process of job order costing, starting with recording costs for materials, labor, and manufacturing overhead. Direct costs are debited to the work in progress account, while indirect costs are debited to the manufacturing overhead control account. Overhead is applied using a predetermined rate. Finished units' costs are transferred to the finished goods inventory. Discrepancies between incurred and applied overhead are adjusted at the end of production. The tutorial concludes with a summary of cost flows in job order costing.

In job order costing, where are direct material and labor costs initially recorded?

• Manufacturing overhead control account

• Finished goods inventory

• Cost of goods sold

• Work in progress account

How is manufacturing overhead applied to the work in progress account?

• Proportionally to material costs

• Based on direct labor hours

• Using a predetermined rate

• Using actual overhead costs

What happens to the cost of finished units in job order costing?

• Credited to cost of goods sold and debited to finished goods inventory

• Debited to cost of goods sold and credited to finished goods inventory

• Debited to the work in progress account and credited to finished goods inventory

• Credited to the work in progress account and debited to finished goods inventory

When units are sold, how are the costs recorded?

• Debited to work in progress and credited to finished goods inventory

• Credited to work in progress and debited to cost of goods sold

• Credited to finished goods inventory and debited to cost of goods sold

• Debited to finished goods inventory and credited to cost of goods sold

How are discrepancies between incurred and applied overhead handled?

• Transferred to the finished goods inventory

• Balanced by adjusting the manufacturing overhead control account

• Adjusted by adding or subtracting from the cost of goods sold

• Ignored until the next accounting period