Video - Manufacturing Costs Flashcards
3 factors of production
direct material
direct labor
manufacturing overhead
Prime Costs
direct material costs plus direct labor costs
Conversion costs
direct labor costs plus factory OH costs
Product costs
inventorial or manufacturing costs; physically attach to products (if in inventory, assets, if sold, in COGS)
Period costs
costs attach to the period they are incurred, e.g. operating expenses
Actual Costing
simplest / most accurate. waits until all costs are known
AQ x AP
Actual Quantity x Actual Price
Normal Costing
moderately simple, moderately accurate
DM and DL are traced to WIP when the costs become known
AQ x POR
Actual Quantity x Predetermined OH Rate
Standard costing
uses predetermined estimated rates and quantities to record both direct costs and OH
SQA x SP
Std Quantity Allowed x Std Price
Indirect labor is a
A Prime Cost
B Conversion Cost
C Period Cost
D Nonmanufacturing cost
B Conversion cost
Because indirect labor and indirect materials include OH which is included in conversion costs
Describe cost flow
Raw Materials
Direct Labor
Overhead
flows to WIP
to Finished Goods
to COGS
Which of the following is assigned to goods that were either purchased or manufactured for resale?
A Relevant cost
B Period cost
C Opportunity cost
D Product cost
D Product cost
In a traditional job order cost system, the issue of indirect materials to a production department increases
A Stores control
B Work in process control
C Factory overhead control
D Factory overhead applied
C Factory overhead control
OH:
Debit Factory OH Control
Credit Factory OH Applied
Applied OH
The amount of estimated OH charged to production. Multiply predetermined OH rate by actual # of units used in production.
DR WIP
CR Factory OH Applied
Actual OH
The amount actually paid for OH expenses
DR: Factory OH Control
CR: AP
Closing out OH accts
DR Factory OH Applied
CR Factory OH Control
