Chapter 2: Job-Order Costing [Unit Product Costs] Flashcards
What is Absorption Costing?
A method that includes all manufacturing costs
Allocation Base
A measure of activity such as labor-hours, or machine hours
What is a Bill of Materials?
A document documenting how much of a material is required to manufacture a product.
What is a cost driver?
A factor that causes overhead costs such as machine-hours, beds occupied, and flight-hours.
Cost-price pricing
A predetermined markup, determining the target selling price
What is a Job Cost Sheet?
A document recording the materials, labor, and overhead cost of a job.
Material Requisition Form
A document the specifys’ the type and amount of a material that should be removed from the storeroom, and the job charged for the cost of them.
Multiple Predetermined Overhead Rates
A system with several overhead cost pools, which have a different rate attached.
Normal Cost System
Applies overhead to jobs by multiplying the overhead rate by the actual amount of allocation bases.
Overhead Application
Assigning overhead to specific jobs
What is the Plantwide overhead rate?
A single predetermined overhead rate used across the entire plant
What is the Predetermined Overhead Rate?
A rate used to charge manufacturing overhead cost to jobs
Predetermined Overhead Rate
Total Manufacturing Overhead / Total Amount of allocation base
Time Ticket
A document recording how much time an employee spends on various activites
How do you measure the Direct Materials Cost?
(1) Create a Production Order, (2) Create a Job Cost Sheet, (3) Measure Direct Labor Cost, (4) Assign and Compute Predetermined Overhead Rate
What does a Job Cost sheet record?
Material, Labor, and MO costs
How do you measure Direct Labor Costs?
By using a time ticket to track employees direct and indirect activites
Predetermined Overhead Rate Formula
Total Estimated MO Rate / Estimated Total Amount of Allocation Base
Cost Formula
Y= a +bX
What does “Y” equal in the cost formula?
Estimated Total Manufacturing Overhead Cost
What does “a” mean on the cost formula?
Estimated Total Fixed Manufacturing Overhead Cost
What does “b” equal on the cost formula?
Estimated Variable Manufacturing Overhead Cost per unit
What does “X’ equal on the cost formula?
Estimated total amount of allocation base
Overhead Applied Formula
Predetermined Overhead Rate x Allocation Base
How do you use multiple predetermined overhead rates?
(1) Calculate est total manufacturing overhead costs, (2) Calculate Predetermined Overhead Rates, (3) Calculate amount of overhead applied to job__, (4) Calculate Total Job Cost, (5) Calculate Selling Price
How do you use the Two-Step Process (COGS)?
(1) Calculate Unit Products Costs, (2) Calculate Cost of Goods Sold
How do you use the Two-Step Process (Finished Goods)?
(1) Calculate the number of units in ending finished goods, (2) Multiply Finished goods by Unit product costs
