Ch. 4

Question 1

actual costing

Answer 1

a costing system that traces direct costs to a cost object by using the actual direct cost rates times the actual quantities of the direct cost inputs

Question 2

actual indirect-cost rate

Answer 2

calculated by dividing actual total indirect costs in the pool by the actual total quantity of the cost-allocation base

Question 3

adjusted allocation-rate approach

Answer 3

restates all OH entries in the general ledger and subsidiary ledgers using actual cost rates rather than budgeted cost rates

Question 4

budgeted indirect-cost rate

Answer 4

(budgeted annual indirect costs)/(budgeted annual quantity of the cost-allocation base)

Question 5

cost-allocation base

Answer 5

a systematic way to link an indirect cost or group of indirect costs to cost objects

Question 6

cost-application base

Answer 6

when the cost object is a job, product, or customer, the cost allocation base is called a cost application base

Question 7

cost pool

Answer 7

grouping of individual indirect cost items

Question 8

job

Answer 8

a product or service

Question 9

job-cost record

Answer 9

also called a job-cost sheet, records and accumulates all the costs assigned to a specific job, starting when the work begins

Question 10

job-cost sheet

Answer 10

also called a job-cost record

Question 11

job-costing system

Answer 11

the job cost is the unit or multiple of units of a distinct product or service called a job

Question 12

labor-time sheet

Answer 12

contains info about the amount of labor time used for a specific job in a specific department

Question 13

manufacturing overhead allocated

Answer 13

also called manufacturing overhead applied, the amount of manufacturing overhead costs allocated to individual jobs based on the budgeted rate multiplied by the actual quantity used of the allocation base

Question 14

material-requisition record

Answer 14

contains info about the cost of DM used on a specific job and in a specific department

Question 15

normal costing

Answer 15

a costing system that (1) traces direct costs to a cost object by using the actual direct-cost rates times the actual quantities of the direct-cost inputs and (2) allocates indirect costs based on the budgeted indirect-cost rates times the actual quantities of the cost-allocation bases

Question 16

process-costing system

Answer 16

the cost object is masses of identical or similar units of a product or service

Question 17

proration

Answer 17

spreads underallocated OH or overallocated OH among ending WIP, FG, and COGS inventory

Question 18

source document

Answer 18

an original record that supports journal entries in an accounting system

Question 19

overallocated indirect cost

Answer 19

also called overapplied and overabsorbed indirect costs, occur when the allocated amount of indirect costs in an accounting period is greater than the actual amount

Question 20

underallocated indirect costs

Answer 20

also called underapplied and under absorbed indirect costs, occurs when the allocated amount of indirect costs in an accounting period is less than the actual (incurred) amount