9/4 Chapter 5 Flashcards
process costing
many units of products that are not distinguishable
job order costing
taking DM and DL and assigning it to a specific job, MOH is indirect and is allocated to each part of the job.
job order costing
you have an order for every job. ex purchase order Engineering Bill of materials job cost sheet cost accountant applies overhead
Overhead allocation
allocating costs we can’t trace
ex: direct labor hours
direct labor dollars
machine hours
machine hours
if we use highly expensive machinery for that job
Predetermined Overhead Rate POHR
Estimated total mfg OH Cost/Estimated total units in the allocation base
the allocation base is a cost driver that causes overhead
Overhead applied
POHR * actual activity(actual amount of the allocation based upon the actual level of activity)
underapplied OH
when our actual Overhead exceeds the applied amount
period costs
nonmanufacturing costs
absorption costing
all manufacturing costs are treated as product costs
