In job-order costing, how are direct materials and direct labor costs charged to jobs?
AAllocated using a predetermined overhead rate
BTraced directly to each specific job using job cost sheets
CExpensed immediately as period costs
DAveraged across all units produced during the period
Explanation
Core Concept: Direct materials and direct labor are prime costs that can be physically and economically traced directly to individual job cost sheets. Context/Distractors: Predetermined overhead rates are used to allocate manufacturing overhead, not direct costs. Averaging across all units is typical of process costing. Exam Tip/Key Fact: Job-order costing is used when customized or unique goods are produced.
Exam Relevance
- Topic: Cost Accounting
- Subtopic: Job-Order Costing
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