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Accounting 231
Test 1- Chapter 2
16
Accounting
Undergraduate 3
02/06/2012

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Term
Absorbtion Costing
Definition
A costing method that includes all manufacturing costs--direct materials, direct labor, and both variable and fixed manufacturing overhead--in the cost of a product.
Term
Allocation Base
Definition
A measure of activity such as direct labor hours or machine hours that is used to assign costs to cost objects.
Term
Bill of Materials
Definition
A document that shows the quantity of each type of direct material required to make a product.
Term
Cost Driver
Definition
A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.
Term
Job Cost Sheet
Definition
A form prepared for a job that records the materials, labor, and manufacturing overhead costs charged to that job.
Term
Job-Ordering Costing
Definition
A costing system used in situations where many different products, jobs, or services are produced each period.
Term
Materials Requisition Form
Definition
A document that specifies the type and quantity of materials to be drawn from the storeroom and that identifies the job that will be charged for the cost of those materials.
Term
Multiple Predetermined Overhead Rates
Definition
A costing system with multiple overhead cost pools and a different predetermined overhead rate for each cost pool, rather than a single predetermined overhead rate for the entire company. Each production department may be treated as a seperate overhead cost pool.
Term
Normal Cost System
Definition
A costing system in which overhead costs are applied to a job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job.
Term
Overapplied Overhead
Definition
A credit balance in the Manufacturing Overhead account that occurs when the amount of overhead cost applied to Work in Process exceeds the amount of overhead cost actually incurred during a period.
Term
Overhead Application
Definition
The process of charging manufacturing overhead cost to job cost sheets and to the Work in Process account.
Term
Plantwide Overhead Rate
Definition
A single predetermined overhead rate that is used throughout a plant.
Term
Predetermined Overhead Rate
Definition
A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period. It is computed by dividing the estimated manufacturing overhead cost for the period by the estimated total amount of the allocation base for the period. 
Term
Process Costing
Definition
A costing system used in situations where a single, homogeneous product (such as cement or flour) is produced for long periods of time.
Term
Time Ticket
Definition
A document that is used to record the amout of time an employee spends on various activities.
Term
Underapplied Overhead
Definition
A debit balance in the Manufacturing Overhead account that occurs when the amount of overhead cost actually incurred exceeds the amount of overhead cost applied to Work in Process during a period.
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