Final answer:
Job order costing is used by companies to track costs of individual jobs or projects. Overhead is allocated to each job based on a predetermined rate. Spreading the overhead means allocating indirect costs to each job.
Step-by-step explanation:
The subject of this question is Business.
If a company uses job order costing, it means that it tracks the costs of each individual job or project separately. It is commonly used by companies that produce custom or unique products or services. The company allocates its overhead (indirect costs like rent, utilities, etc.) to each job based on a predetermined overhead rate.
For example, if the company's overhead rate is $10 per direct labor hour and Job A requires 5 direct labor hours, the overhead applied to Job A would be $50.
'Spreading the overhead' refers to allocating the indirect costs to each job. By doing so, the company can accurately determine the total cost of each job and make informed pricing and profitability decisions.