Chapter 2 - Calculating Unit Product Costs Flashcards
What is a costing method that includes all manufacturing costs in unit product costs?
Absorption costing
What is used in situations where many different products are produced each period?
Job-order costing
What is a document that lists the quantity of each type of direct material needed to complete a unit of product?
A bill of materials
What is 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?
The materials requisition form
What records the actual materials, actual labor, and estimated manufacturing overhead costs charged to a job?
A job cost sheet
Labor charges that cannot be easily traced to specific jobs are treated as part of what?
Manufacturing overhead
What includes tasks such as maintenance, supervision, and cleanup?
Indirect labor
What is an hour-by-hour summary of the employee’s activities throughout the day?
A time ticket
Where does the employee time ticket info go on a job cost sheet?
Direct labor
True or False:
Companies with large amounts of fixed manufacturing overhead costs tend to have their costs remain relatively constant from one period to the next
True
What is the formula to find the predetermined overhead rate?
(FMOC / hours) + VMO
Fill in the Blank:
The allocation base is a __________ that causes overhead
Cost Driver
PearCo estimates that it will require 160,000 direct labor-hours to meet the coming period’s estimated production level. In addition, the company estimates total fixed manufacturing overhead at $200,000, and variable manufacturing overhead costs of $2.75 per direct labor hour.
What is the estimated total manufacturing overhead cost?
Y = $200,000 + ($2.75 per direct labor-hour × 160,000 direct labor-hours) Y = $200,000 + $440,000 Y = $640,000
PearCo estimates that it will require 160,000 direct labor-hours to meet the coming period’s estimated production level. In addition, the company estimates total fixed manufacturing overhead at $200,000, and variable manufacturing overhead costs of $2.75 per direct labor hour. (TMOC = $640,000)
What is the predetermined overhead rate?
PDOR = 640,000/160,000 PDOR = $4 per direct labor hours
What is a factor that causes overhead costs?
The cost driver
What is a single predetermined overhead rate that is used throughout a plant?
A plantwide overhead rate
Fill in the Blank:
A cost system with _____________________ uses more than one overhead rate to apply overhead costs to jobs
Multiple predetermined overhead rates
Fill in the Blank:
________________ manufacturing costs to jobs adversely influences planning and decisions made by managers.
Inaccurately assigning
What often fails to accurately allocate the manufacturing overhead costs used during the production process to their respective jobs?
Job-order costing systems
Fill in the Blank: Direct/Indirect
Job-order costing systems can accurately trace _____ materials and ______ labor costs to jobs
- Direct
2. Direct
What do job-order costing systems often use that do not reflect how jobs actually use overhead resources?
Allocation bases
Fill in the Blank:
The allocation base in the predetermined overhead rate must _____ the overhead cost to improve job cost accuracy
Drive
What approach is a company employing when they create overhead rates based on the activities that it performs?
Activity-based costing
What is the result when a company applies less overhead to production than it actually incurs?
Underapplied overhead
