Quiz 19: Job Order Cost Systems


Solution - As can be seen from the graph, the unit cost of the product has been steadily increasing with sudden peaks on every Friday. Over a course of 3 weeks the unit cost increased from $21 to $39. In order to further analyze, the increase in per unit cost and the peaks appearing on every Friday, additional data is required. Further breakup of the constituents of unit costs, namely direct material, direct labor and factory overheads need to be ascertained along with the number of units being sold.

(a) Two main types of cost accounting systems for manufacturing companies are Job order cost system and process cost system. (b) The job order cost system provides a separate record of each quantity of product that passes through the factory. (c) Process cost systems accumulate costs for each department or process within a factory.

(a) Materials requisitioned for use (both direct and indirect). (b) Factory labor used (both direct and indirect). (c) Application of factory overhead costs to jobs. (d) Jobs completed. (e) Cost of goods sold.

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