Ch 4: "Job Costing" A. Ch 4 Learning Objective 1: Describe the building-block concepts of costing systems. 1. LO 4-1 overview: The building-block concepts of a costing system are cost object, direct costs of a cost object, indirect costs of a cost object, cost pool, and cost allocation base. Costing systems should report cost numbers that reflect the way chosen cost objects, such as products or services, use the resources of the organization. 2. Study pages 98-100. 3. LO 4-1 lecture slides. Note: Look for the image of your instructor within the slides. Clicking on his smiling face will start a short lecture. 4. Q1: Define cost pool, cost tracing, cost allocation, and cost allocation base.

Cost pool––a grouping of individual indirect cost items. Cost tracing––the assigning of direct costs to the chosen cost object. Cost allocation––the assigning of indirect costs to the chosen cost object.
Cost-allocation base––a factor that links in a systematic way an indirect cost or group of indirect costs to cost objects. 5. A ___ is a grouping of individual indirect cost items.
a. cost allocation base
b. cost assignment
c. cost pool
d. job-costing system The correct answer is "c," cost pool. |

6. Q5: Give examples of two cost objects in companies using job costing. Major cost objects that managers focus on in companies using job costing are a product such as a specialized machine, a service such as a repair job, a project such as running the Expo, or a task such as an advertising campaign.

7. A cost-allocation base may be any of the following except a:
a. cost driver.
b. cost pool.
c. way to link indirect costs to a cost object.
d. nonfinancial