Chapter 4 Flashcards
Name the 3 main characteristics of a costing method.
The cost accumulation method
The cost measurement method
The overhead application method
Name the 2 types of cost accumulation methods.
Job costing
Process costing
Name the 3 types of cost measurement methods.
Actual
Normal
Standard
Name the 2 types of overhead application methods.
Value-based
Activity-based
Manufacturing operations whose conversion activities are very similar across several product lines, but whose direct materials used in the various products differ significantly, use _____ costing, a hybrid costing system.
Operation
Name the 2 types of spoilage.
Normal
Abnormal
Name the 2 types of normal spoilage.
Specific Normal Spoilage
Common Normal Spoilage
Normal spoilage which is particular to a given job and is not due to factors related to other jobs.
Specific Normal Spoilage
Normal spoilage which is due to factors that affect two or more jobs.
Common Normal Spoilage
Name the cost accumulation, cost measurement, and overhead application methods most likely to be used by a cost leadership firm.
Process
Standard
Activity-Based
A ____ costing system is appropriate when most costs incurred for the job can be readily identified with a specific product, batch of products, customer order, contract, or project.
Job
A ____ costing system is likely to be found in a firm that primarily produces a limited variety of homogeneous products or services.
Process
A(n) ____ costing system uses actual costs for DM, DL, and FOH.
Actual
A(n) ____ costing system uses actual costs for DM and DL and estimated costs for FOH.
Normal
A(n) ____ costing system uses standard costs for DM, DL, and FOH.
Standard
Name the 3 types of errors in overhead application.
Aggregation Error
Specification Error
Measurement Error
The overhead costing error that arises when a single plantwide rate is used instead of departmental rates, when department rates would yield more accurate cost information.
Aggregation Error
The overhead costing error that arises when the wrong cost driver is used in the application rate.
Specification Error
The overhead costing error that arises when the amounts used for estimated cost drivers or estimated overhead are incorrect.
Measurement Error
Waste in excess of what is expected to occur under normal operating conditions.
Abnormal Spoilage
The process of accumulating, classifying, and assigning direct materials, direct labor, and overhead costs to products, services, or projects.
Costing
A cost sheet that records and summarizes the costs of direct materials, direct labor, and overhead for a particular job.
Job Cost Sheet
An unacceptable unit that occurs under efficient operating conditions; spoilage that is inherent in the manufacturing process.
Normal Spoilage
A hybrid costing system that used job costing to assign direct materials costs to jobs and process costing to assign conversion costs to products or services.
Operation Costing
The additional work that must be done to make a nonconforming good acceptable so that it can be sold in regular channels.
Rework
Materials left over from the manufacture of a product that have little or no value.
Scrap
An unacceptable unit that is discarded or sold for disposal value.
Spoilage
A sheet showing the time an employee worked on each job, the pay rate, and the total cost chargeable to each job.
Time Ticket
Normal spoilage that is specific to a job is charged to _____ .
The specific job so the cost of the spoilage is spread over the cost of the good units in that job.
Normal spoilage that is common to two or more jobs is charge to ____ .
Factory overhead so it affects the costs of all jobs.
When scrap for a specific job is sold for cash, the amount received is debited / credited to this account.
Credited to Work-in-Process
When scrap common to all jobs is sold for cash, the amount received is debited / credited to this account.
Credited to Factory Overhead
True or False
Cost of rework is treated in the same way as cost of spoiled units.
True
