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Q. 17-22RQ

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Horngren'S Financial And Managerial Accounting
Found in: Page 938

Short Answer

Explain the terms accumulate, assign, allocate, and adjust as they apply to job order costing.

Accumulates: While determing the job order costing, the different costs are accumulated in various accounts as and when they are incurred. Assign: The direct costs are assigned to individual jobs and recorded on the job cost records. Allocate: Manufacturing overhead costs (indirect costs) are allocated to individual jobs based on a predetermined overhead allocation rate. Adjust: The Manufacturing Overhead account is adjusted at the end of the period for the amount of underallocated or overallocated manufacturing overhead.

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Step by Step Solution

Costing

Costing is a technique which is used to determine the total cost (whether direct or indirect) of the product manufactured by the company.

the process of accumulate, assign, allocate and adjust applied in job order costing

While computing the job order costing, the cost incurred by the company are accumulated to various accounts, then assign the direct cost to individual jobs and allocate the manufacturing overhead to the individual jobs. After that, the company adjusts the over allocated of underallocated overhead expense to nullify the over or under allocation.

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