The job cost record summarizes which of the following sets of information for each job?
The correct answer and explanation is:
The correct answer is: The direct materials, direct labor, and manufacturing overhead costs associated with a particular job.
Explanation:
A job cost record is a document that accumulates and tracks all the costs related to a specific job or project in a job order costing system. This system is commonly used by companies that produce custom products or provide unique services, where each job is different from the others and requires specific resources.
The job cost record serves as a detailed account for each job and includes the following key cost categories:
- Direct Materials:
This represents the raw materials and components that can be directly traced to a specific job. For example, in a furniture manufacturing company, the wood, nails, and varnish used for a specific piece of furniture would be considered direct materials. The cost of these materials is recorded as part of the job cost to determine the total expenses related to materials used for that job. - Direct Labor:
This category includes the wages and salaries of employees directly involved in the production or execution of a specific job. In a construction company, for example, workers’ time spent building a custom house would be considered direct labor. The time sheets or payroll records for each worker are used to calculate the direct labor costs for the job. - Manufacturing Overhead:
Manufacturing overhead includes indirect costs that cannot be directly traced to a specific job but are necessary for the production process. These costs include items such as factory utilities, depreciation of machinery, and indirect labor (e.g., supervisors or maintenance staff). Overhead is typically allocated to jobs based on a predetermined overhead rate, which is calculated using factors like labor hours or machine hours.
By keeping track of these three elements—direct materials, direct labor, and overhead—the job cost record helps businesses determine the total cost of a job, set prices, and evaluate profitability. The information recorded in these job cost records is also vital for financial reporting and decision-making, especially when businesses need to analyze the efficiency and cost-effectiveness of their operations.