When a Job Is Completed in a Service Organization, the Job

question 27

Multiple Choice

When a job is completed in a service organization, the job costs are transferred to the

• A) work in process account
• B) cost of services account
• C) finished goods account
• D) cost of goods sold account

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Definitions:

Unused Capacity

The available but unutilized production capability of a firm which could generate revenue if employed.

Fixed Overhead

Refers to the consistent, unchanging costs associated with running a business that do not vary with the level of production or sales.

Job-Order Costing

Job-order costing is an accounting method used to track costs and evaluate the profitability of individual jobs or batches.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products based on a selected activity base, such as machine-hours or labor-hours, calculated prior to the actual production.