Question

Which of the following statements is true of labor cost flows associated with a job-order costing? a.They reflect only indirect labor cost. b.They reflect both indirect labor and administrative overhead costs. c.They reflect both direct and indirect labor costs. d.They reflect only direct labor cost.

Answer 1

Answer:

d.They reflect only direct labor cost.

Explanation:

Job order costing is an accounting method that assigns cost and revenue to each job that is performed in the production process.

Reporting shows profit that is realised per job. Job numbers are assigned to individual items of expense and revenue.

Examples of companies that use job order costing include food factories, clothing factories, accounting firms, law firms, hospitals, and aircraft manufacturers.

Job order costing therefore reflects only the direct labour that is inputted into the job.