Manufacturing overhead in a job order cost system is assigned to units produced through an overhead application rate, which is calculated by dividing total manufacturing overhead by the number of jobs. This rate is then multiplied by the consumption level of each job to compute the manufacturing overhead allocated to that job.

1. Which of the following is a characteristic of manufacturing overhead in a job order cost system?
It is assigned to units produced by means of an overhead application rate
It is assigned to units produced by means of an overhead application rate
It includes the cost of all labor relating to manufacturing operations.
It includes the cost of direct materials used and of indirect labor.
Solution
It is assigned to units produced by means of an overhead application rate is correct option.
Total manufacturing overhead is divided by number of jobs it is used in. Once the overhead
application rate is computed, it is multiplied with the consumption level of jobs and computed
manufacturing overhead for each job.