Term
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Definition
| Anything for which a separate measurement of costs is desired |
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Term
| Direct Costs of a cost object |
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Definition
| traceable to a particular cost object |
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Term
| Indirect costs of a cost object |
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Definition
| costs that are related to a cost object but cannot be traced (also referred to as overhead) |
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Term
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Definition
| A grouping of individual cost items |
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Term
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Definition
| a basis of systematically linking indirect cost to a cost object |
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Term
| Job Order Systems (Types of Cost Systems) |
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Definition
| Cost object is a distinct product or service called a job, used for specific units or small batches (houses, airplanes, furniture, etc.) |
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Term
| Process Cost Systems (Types of Cost Systems) |
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Definition
| Cost object is masses of identical or similar units, used for mass production of LIKE units (screws, folding chairs, etc) |
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Term
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Definition
| Direct costs are traced to particular job, indirect costs are allocated based on a predetermined or budgeted overhead rate |
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Term
| Predetermined Overhead Rate |
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Definition
| Indirect cost is estimated for the period, an appropriate cost driver is selected. Rate= Overhead Dollars Budgeted / Quantity of Cost Driver |
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Term
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Definition
| Charged to WIP as overhead rate x cost driver activity for specific item |
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Term
| Variance between Applied and Actual Overhead |
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Definition
If small, charged to Cost of Goods Sold
If material, proportionally (by ending balance) charged to WIP inv, FG inv, and CGS |
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