5 Flashcards
absorption costing
*used is to determine product costs
all manufacturing costs, both fixed and variable, are assigned to units of product – units are said to full absorb manufacturing costs
process costing
used in companies that produce many units of a single product for long periods.
homogenous products that flow through production on a continuous basis
job-order costing
when many different products are produced each period.
Bill of Materials
a document that lists the type of quantity of each type of direct material needed to complete a unit of product.
materials requisition form
a document that specifies the type and quantity of materials to be drawn from the storeroom and identifies the job that will be charged for the cost of the materials.
it is used to control the flow of materials into production and also for making entries in the accounting records
job cost sheet
a form prepared for the job that records the materials, labor and Man o/h costs charged to that job.
done by the accounting department
time tickets
an hour by hour summary of the employees activities throughout the day.
allocation base
a measure such as direct labour hours or machine hours that is used to assign overhead costs to products and services.
common allocation bases: direct labor hours and cost, machine hours, (with a company that only has a single product) units of product
*should drive or cause o/h costs
predetermined overhead rate
*computed before period begins
(estimated total Man. O/H Costs) / (Estimated total amount of the allocation base)
overhead application
assigning o/h costs to jobs
normal costs system
applies overhead to jobs by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the jobs.
cost driver
a factor, such as machine hours, beds occupied, that causes o/h costs. *allocation base
