Which costs are assigned under a job order costing system?

In a job order costing system, costs are assigned to specific jobs or batches, allowing companies to track expenses associated with each job accurately. This system is especially useful when products are customized or produced in distinct batches.

The correct response highlights the primary elements of costs that are directly traceable to the production of a job: direct materials, direct labor, and manufacturing overhead.

Direct materials refer to the raw materials that are directly involved in manufacturing a product. They are easily traceable to the specific job being completed. Direct labor includes the wages of employees who are directly involved in manufacturing the product, making it another direct expense attributed to a job.

Manufacturing overhead encompasses all the indirect costs associated with production, which cannot be traced directly to specific jobs on a one-to-one basis. This includes utilities, maintenance, and other indirect costs that support the production process.

Combining these three types of costs gives a comprehensive overview of the total expenses incurred for a specific job, which is essential for accurate pricing and profitability analysis in a job order costing system. This allows managers to assess the financial performance of each job and make informed decisions about resource allocation and pricing strategies.