Chapter 3: Job-Order Costing: Cost Flows and External Reporting Flashcards
A measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects.
Allocation Base
A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period.
Predetermined overhead rate
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.
Normal Costing
A form that records the direct materials, direct labor, and manufacturing overhead cost charged to a job.
Job cost sheet
include any materials that go into the final product.
Raw materials
consists of units of product that are only partially complete and will require further work before they are ready for sale to the customer.
Work in Process
consist of completed units of product that have not yet been sold to customers.
Finished Goods
JE
On April 1, Ruger Corporation had $7,000 in raw materials on hand.
During the month, the company purchased on account an additional $60,000 in raw materials.
Raw Materials
Accounts Payable
A costing system used in situations where many different products, jobs, or services are produced each period.
Job-order costing
These raw materials included $50,000 of direct and $2,000 of indirect materials.
Work in Process
Manufacturing Overhead
Raw Materials
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.
Absorption Costing
the employee time tickets (which provide hourly summaries of each employee’s activities throughout the day) included $60,000 recorded for direct labor and $15,000 for indirect labor.
Work in Process
Manufacturing Overhead
Salaries and Wages Payable
To illustrate, assume that Ruger
Corporation incurred the following general factory costs during April:
Utilities (heat, water, and power) $21,000
Rent on factory equipment
16,000
Miscellaneous factory overhead costs 3,000
Total $40,000
Manufacturing Overhead
Accounts Payable
Also assume that during April, 10,000 machine-hours were worked on Job A and 5,000 machine-hours were worked on Job B (a total of 15,000 machine-hours). Thus, $90,000 in overhead cost ($6 per machine-hour × 15,000 machine-hours = $90,000) would be applied to Work in Process.
Work in Process
Manufacturing Overhead
Actual manufacturing overhead costs are recorded as _______ to the Manufacturing Overhead
account.
Debits
