Key Terms

Question 1

Actual cost system

Answer 1

An approach that assigns actual costs of direct materials, direct labor, and overhead to products.

Question 2

Adjusted cost of goods sold

Answer 2

The cost of goods sold after all adjustements for overhead variances are made.

Question 3

Applied overhead

Answer 3

Overhead assigned to production using prdeterminrates

Question 4

Causal factors

Answer 4

activities or variables that invoke service cost. Generally, it is desirale to use causal factors as the basis for allocating service costs.

Question 5

Commen costs

Answer 5

The costs of resources used in the output of two or more services or products.

Question 6

Departmental overhead rate

Answer 6

Estimated overhead for a singe department divided by the estimated avtivity level for that same department.

Question 7

Direct method

Answer 7

A method that allocates service costs directly to producing departments. this method ignores any interactions that may exist among support departmants.

Question 8

Job

Answer 8

One distinct unit or set of units for which the costs of production must be assigned.

Question 9

Job-order cost sheet

Answer 9

A subsidiary account to the work-in-progress account on which the total costs of materials, labor, and overhead for a single job are accumulated.

Question 10

Job-order costing system

Answer 10

A costing system in which costs are colected and assigned to units of production for each individual job.

Question 11

Material requisition form

Answer 11

A source decoment that records the type, qauntity, and unit price of the direct matrials used to each job.

Question 12

Nornal cost of goods sold

Answer 12

The cost of goods sold befor adjustment for overhead variance.

Question 13

Overapplied overhead

Answer 13

The amount by which applied overhead exceeds actual overhead.

Question 14

Overhead variance

Answer 14

The difference between actual overhead and applied overhead.

Question 15

Plantwide overhead rate

Answer 15

A single overhead rate calculated using all estimated overhead for a factory divided by the estimated activity level across the entire factory.

Question 16

Predetermined overhead rate

Answer 16

An overhead rate computed using estimated data.

Question 17

Process-costing system

Answer 17

A cost system that accumulates production costs by process or by department for a given period of time.

Question 18

Producing departments

Answer 18

Units within an organization responsible for producing the products or services that are sold to customers.

Question 19

Reciprocal method

Answer 19

A method that simultaneously allocates service costs to all user departments. It gives full consideration to interaction among support departments.

Question 20

Sequential or step method

Answer 20

A method that allocates service costs to user departments in a sequential manner. it gives partial consideration to interactions among support departments.

Question 21

Support departments

Answer 21

Units within an organization that provide essential support services for producing departments.

Question 22

Time ticket

Answer 22

A source document by which direct labor costs are assigned to individaul job

Question 23

Underapplied overhead

Answer 23

The amount by which actual overhead exceeds applied overhead.