Chapter 2 Flashcards
What is absorption costing?
A costing method that includes all manufacturing costs-direct materials, direct labor, and both variable and fixed manufacturing overhead-in unit product costs.
What is an allocation base?
A measure of activity such as direct labor-hours or machine-hours used to assign costs to cost objects.
(14 p. 64)
What is a bill of materials?
A document showing the quantity of each type of direct material required to make a product.
What is a cost driver?
A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.
What is cost-plus pricing?
A pricing method in which a predetermined markup is applied to a cost base to determine the target selling price.
(14)
What is a job cost sheet?
A form that records the direct materials, direct labor, and manufacturing overhead cost charged to a job.
(4)
What is job-order costing?
A costing system used in situations where many different products, jobs, or services are produced each period.
What is a materials requisition form?
A document specifying the type and quantity of materials to be drawn from the storeroom and the job charged for the cost of those materials.
(p. 62)
What are multiple predetermined overhead rates?
A costing system with multiple overhead cost pools and a different predetermined overhead rate for each cost pool, rather than a single predetermined overhead rate for the entire company. Each production department may be treated as a separate overhead cost pool.
(14 p. 70)
What is a normal cost system?
A costing system that applies overhead costs to jobs by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job.
What is overhead application?
The process of assigning overhead cost to specific jobs.
(14 p. 65)
What is a plantwide overhead rate?
A single predetermined overhead rate used throughout a plant.
What is a predetermined overhead rate?
A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period. It is computed by dividing the estimated total manufacturing overhead cost for the period by the estimated total amount of the allocation base.
(14 p. 70)
What is a time ticket?
A document that records the amount of time an employee spends on various activities.
(19 p. 63)
