To begin, select one of the following types of businesses: Custom home builder Auto repair shop Accounting firm Lawn service company Television show production Airplane built for the U.S. Air Force Describe how your chosen business might use job order costing to account for its product(s) or service(s). Explain the types of costs that would be classified as direct versus indirect, variable versus fixed, and product versus period. Be sure to address the overhead allocation base that you would suggest for the company to use by presenting an example of how your type of business would account for overhead and prepare a sample journal entry to dispose of any under- or overapplied overhead under normal costing. Solution i would choose the custom home builder, because if we talk about job order costing, it mainly covers the firms which produce different products under one roof and the work/job done on a single product is majorly different from the other. here, direct costs would be the material used for the building of the home for example the cement , bricks, iron rods etc and the labour or men working on it to build it. Indirect would be the builder\'s expertise, the architect or the civil engineer, the head of the labourers etc. Variable will be the electricity used to run the machines on the construction site, the labour refreshments and the labour costs if they are on per day basis etc. Fixed will be the fees of the contructor, the designer or the engineer etc. the over head allocation base would be the working hours spent in the different home projects. To dispose off for example the under applied overhead, i would use: Cost of costruction .........debit xxxx to overheads a/c....................xxxx .

1. To begin, select one of the following types of businesses:
Custom home builder
Auto repair shop
Accounting firm
Lawn service company
Television show production
Airplane built for the U.S. Air Force
Describe how your chosen business might use job order costing to account for its product(s) or
service(s). Explain the types of costs that would be classified as direct versus indirect, variable
versus fixed, and product versus period. Be sure to address the overhead allocation base that you
would suggest for the company to use by presenting an example of how your type of business
would account for overhead and prepare a sample journal entry to dispose of any under- or
overapplied overhead under normal costing.
Solution
i would choose the custom home builder, because if we talk about job order costing, it mainly
covers the firms which produce different products under one roof and the work/job done on a
single product is majorly different from the other.
here, direct costs would be the material used for the building of the home for example the cement
, bricks, iron rods etc and the labour or men working on it to build it.
Indirect would be the builder's expertise, the architect or the civil engineer, the head of the
labourers etc.
Variable will be the electricity used to run the machines on the construction site, the labour
refreshments and the labour costs if they are on per day basis etc.
Fixed will be the fees of the contructor, the designer or the engineer etc.

2. the over head allocation base would be the working hours spent in the different home projects.
To dispose off for example the under applied overhead, i would use:
Cost of costruction .........debit xxxx
to overheads a/c....................xxxx