Module 3 - Job order costing Flashcards
What is a bill of materials?
It is a document that lists the quantity of each type of direct material needed to complete a unit of product
What is a materials requisition form?
a document that specifies the type and quantity of materials to be drawn from the storeroom and identifies the job that will be charged for the cost of the materials.
What is a job cost sheet?
It records the materials, labor, and manufacturing overhead costs charged to that job
What is a time ticket?
It is an hour-by-hour summary of the employee’s work activities throughout the day.
What is a predetermined overhead rate?
It is the estimated manufacturing costs for the period divided by an allocation base, that is used to allocated manufacturing overhead to jobs.
What is allocation base?
An allocation base is a measure such as direct labor-hours (DLH) or machine-hours (MH) that is used to assign overhead costs to products and services
Why do we use predetermined overhead rates?
Because manufacturing overhead is hard to allocate to jobs because it is an indirect cost & it varies.
Define overhead application?
The process of assigning overhead costs to jobs.
What is a cost driver?
A factor that causes overhead costs?
Examples of cost drivers are?
Machine hours
Direct labour hours
Units produced
What is the departmental approach in relation to predetermined overhead rates?
this approach looks at different rates for different departments depending on their drivers e.g. labour hours, machine hours etc
What is the activity based approach in relation to predetermined overhead rates?
this approach looks to create overhead rates related to the activities performed within departments as some departments may perform more than one activity.
