Chapter 4 lecture Flashcards
are anything for which a cost measurement is desired
cost objects
of a cost object are costs that can be traced to that cost object in an economically feasible way
direct costs
of a cost object are costs that cannot be traced in an economically feasible way
indirect costs
a grouping of individual indirect cost items. simplify the allocation of indirect costs because the costing system does not have to allocate each cost individually
cost pools
a systematic way to link an indirect cost or group of indirect costs to cost objects
cost-allocation base
in a __________the object is a unit or multiple units of a distinct product or service which we call a job. each job generally uses different amounts of
job costing system
in a _________, the cost object is masses of identical or similar units of a product or service. in this type of system, we divide the total cost of producing an identical or similar product or service by the total number of units produced to obtain a per unit cost
process costing system
types of costing approaches
- actual costing
- normal costing
- standard costing
allocates indirect costs based on the actual indirect cost rates times the actual quantities of the cost allocation base
actual costing
actual costing formula
actual annual indirect costs /
actual annual quantity of the cost allocation base
allocates indirect costs based on the budgeted indirect cost rates times the actual quantities of the cost allocation base
normal costing
normal costing equation
budgeted annual indirect costs
/
budgeted annual quantity of the cost allocation base
- identify the job that is the chosen cost object
- identify the direct costs of the job
- select the cost-allocation bases to use for allocating indirect costs to the job
- identify the indirect costs associated with each cost allocation base
- compute the rate per unit of each cost-allocation base used to allocate indirect costs to the job
- compute the indirect costs allocation to the job
- compute total costs of the job
7 steps for job costing total costs calcs
why use annual periods for indirect cost rates
to avoid outliers because there is seasonal things such as using more electricity when we are making more items and using less electricity when we are making less items
seven steps for job costing total costs
- identify the job that is the chosen cost object
- identify the direct costs of the job
- select the cost-allocation base(s) to yse for allocating indirect costs to the job
- identify the indirect
an original record that supports journal entries in an accounting system
source document
a source document that records and accumulates all the costs assigned to a specific job, starting when work begins.
job-cost record/job-cost sheet
source document that contains information about the cost of direct materials used on a specific job and in a specific department
materials requisition record
source document that contains information about the amount of labor time used for a specific job in a specific department
labor timesheet
a general ledger account containing only summary amounts. the details for each control account will be found in a related subsidiary ledger
control account
all products costs are accumulated in the _______ account
work in process control
(such as direct materials used, direct labor incurred, factory overhead allocation)
actual indirect costs (overhead) are accumulated in the _______ account
manufacturing overhead control account
if overhead control > overhead alllocated =
= underallocated overhead
if overhead control < overhead allocated =
= overallocated overhead
the difference between the overhead accounts will be eliminated in the end of period adjusting entry process, using one of three possible methods
- adjusted allocation rate approach
- proration approach
- write off approach
all allocations are recalculated with the actual, exact allocation rate
(which of the 3 methods to eliminated the difference between the overhead accounts in the end of period adjusting entry process is this?)
adjusted allocation rate approach
the differnece is allocated between cost of goods sold, work in process, and finished goods based on their relative sizes
(which of the 3 methods to eliminated the difference between the overhead accounts in the end of period adjusting entry process is this?)
proration approach
the differnece is simply written off to cost of goods sold
(which of the 3 methods to eliminated the difference between the overhead accounts in the end of period adjusting entry process is this?)
write off approach
