Chapter 2

Question 1

absorption costing

Answer 1

a costing method that includes all manufacturing costs- direct materials, direct labor and both variable and fixed manufacturing overhead- in the cost of a product

Question 2

allocation base

Answer 2

a measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects

Question 3

bill of materials

Answer 3

a document that shows the quality of each type of direct material required to make a product

Question 4

cost driver

Answer 4

a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs

Question 5

cost of goods manufactured

Answer 5

the manufacturing costs associated with the good that were finished during the period

Question 6

finished goods

Answer 6

units of product that have been completed but not yet sold to customers

Question 7

job cost sheet

Answer 7

a form that records the materials, labor, and manufacturing overhead costs charged to a job

Question 8

job-order costing

Answer 8

a costing system used in situations where many different products, jobs, or services are produced each period

Question 9

materials requisition form

Answer 9

a document that specifies the type and quantity of materials to be drawn from the storeroom and that identifies the job that will be charged for the cost of those materials

Question 10

multiple predetermined overhead rates

Answer 10

a costing system with multiple overhead cost pools and a diff predetermined overhead rate for each cost pool, rather than a single predetermined overhead rate for the entire company. each production dept may be treated as a separate overhead cost pool

Question 11

normal cost system

Answer 11

a costing system in which overhead costs are applied to a job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job

Question 12

overapplied overhead

Answer 12

a credit balance in the manufacturing overhead account that occurs when the amt of overhead cost applied to WIP exceeds the amt of overhead cost actually incurred during a period

Question 13

overhead application

Answer 13

the process of charging manufacturing overhead cost to job cost sheets and to the WIP account

Question 14

plantwide overhead rate

Answer 14

a single predetermined overhead rate that is used throughout a plant

Question 15

predetermined overhead rate

Answer 15

a rate used to charge man ovh cost to jobs that is established in advance for each period. it is computed by dividing the estimated total man ovh cost for the period by the est total amt of the allocation base for the period

Question 16

raw materials

Answer 16

any materials that go into the final product

Question 17

schedule of cost of goods manufactured

Answer 17

a schedule that contains three elements of product costs- direct materials, direct labor and man ovh- and that summarizes the portions of those costs that remain in ending WIP inventory and that are transferred out of WIP into finished goods

Question 18

schedule of cost of goods sold

Answer 18

a schedule that contains three elements of product costs- direct materials, direct labor and man ovh- and that summarizes the portions of those costs that remain in ending finished goods inventory and that are transferred out of finished goods into COGS

Question 19

time ticket

Answer 19

a document that is used to record the amount of time an employee spends on various activities

Question 20

underapplied overhead

Answer 20

a debit balance in the man ovh account that occurs when the amt of ovh cost actually incurred exceeds the amt of ovh cost applied to WIP during a period

Question 21

work in process

Answer 21

units of product that are only partially complete and will require further work before they are ready for sale to the customer