Term
| Product costing has two purposes: |
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Definition
1. Financial Accounting - To value inventory and compute cost of goods sold
2. Managerial Accounting and Cost Management - For planning, control, directing, and management decision making. |
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Term
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Definition
when products are manufactured in very low volumes or one at a time (ship or airplane manufacturing). |
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Term
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Definition
| when similar but differentiable products are produced in batches of relatively small quantity (high-end furniture, jewelry, special-order printing, agricultural equipment). |
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Term
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Definition
| where products are identical and produced in large quantities (beer, cornflakes, gasoline, electricity) |
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Term
| The Work-in-Process inventory account |
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Definition
| tracks the total dollar amount for all jobs |
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Term
| job-cost record (the subsidiary ledger) |
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Definition
| tracks the costs assigned to each individual job. |
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Term
| To keep track of the costs for each job the company will have a..... |
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Definition
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Term
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Definition
| a list of components that will go into the products being built |
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Term
What is filled out to authorize the items on the bill of material to be used on the job. |
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Definition
| material requisition form |
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Term
| the sum of the costs listed on all job cost records is..... |
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Definition
| the balance in the Work In Process inventory account at that point in time. |
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Term
| The process of assigning overhead costs to production jobs is called |
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Definition
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Term
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Definition
| applies overhead costs to jobs using an actual overhead application rate that is calculated at the end of each period |
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Term
| Why is the actual cost system considered more accurate? |
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Definition
| uses actual OH costs and actual cost driver units |
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Term
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Definition
| which apply OH costs to jobs using a normalized, or predetermined, OH application rate |
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Term
| For the normalized cost system, when are the rates determined |
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Definition
| beginning of each period rather than at the end |
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Term
| predetermined overhead rate (normalized) |
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Definition
Budgedted manufaturing overhead costs
Budgeted amount of cost driver(activity base) |
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Term
| As the cost driver increases what happens to the manufacturing overhead?(Normailized) |
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Definition
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Term
| The most common cost drivers are ......... |
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Definition
direct labor hours, direct labor costs, and machine hours. |
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Term
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Definition
| Predetermined Overhead Rate x Actual Activity |
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Term
| In a normalized cost system manufacturing overhead costs are applied to jobs using an .... |
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Definition
| estimated, predetermined, manufacturing overhead rate |
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Term
| The Manufacturing Overhead account |
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Definition
| a temporary asset account that temporarily houses the actual manufacturing overhead costs until they are allocated to jobs |
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Term
| manufacturing overhead applied comes from the...... |
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Definition
| Manufacturing Overhead account and to the individual jobs |
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Term
| actual overhead ________ the Manufacturing Overhead account |
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Definition
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Term
| overhead applied _______ the Manufacturing Overhead account |
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Definition
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Term
| What happens to the balance of the manufacturing overhead account? |
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Definition
| Since it’s a temporary asset account, the balance will be zeroed out at the end of the year |
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Term
| If Actual Overhead > Applied Overhead |
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Definition
| too little OH went to WIP and COGS Underapplied OH........There’s still some actual OH cost in the Man. OH |
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Term
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Definition
| too much OH went to WIP and COGS Overapplied OH..........There’s less than zero actual OH cost in the Man. OH |
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Term
Disposition of Underapplied/Overapplied Overhead |
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Definition
| most common method for zeroing out the temporary account where the Underapplied or Overapplied Overhead is simply added or subtracted from Cost of Goods Sold |
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Term
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Definition
· There’s still OH left in Man. OH account
· We simply subtract it from Man. OH and add it to COGS |
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Term
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Definition
· There’s less than zero left in the Man. OH account
· We subtract enough from the COGS account and add it to Man. OH such that Man. OH equals zero at the end. |
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Term
| In an actual cost system, overhead is applied using the actual ... |
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Definition
| ...overhead cost and actual cost driver quantities. Thus, there is no under or over applied overhead. They don’t have to estimate anything. Total overhead applied=total actual overhead cost |
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