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31 Cards in this Set
- Front
- Back
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Determinig a product's cost is one of the basic functions of a _____ ____ _____.
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Cost accounting system
(product costing) |
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What is an important feature of a cost accounting system?
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The use of a perpetual system which provides immediate, up-to-date information on the cost of a product.
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When is it applicable to use a process cost accounting system?
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When making a large number of similar products or when there is a continuous product flow.
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A process cost system accumulates....
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product related costs for a period of time.
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Give an example of a company that may use a process cost system.
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Refineries
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When is a job order cost accounting system applicable?
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When making clearly identifiable units or special order products.
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What are the industries that typically use job order costing?
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Furniture, construction, printing and service organizations.
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Name some characteristics of a job order costing system.
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1) Manufacturing costs are collected and assigned to specific jobs or batches of product.
2) Costs are measured for each completed job. 3) One WIP inventory account is used. |
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What is a job order cost sheet?
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A form prepared for each seperate job that records the materials, labor, and overhead costs charged to the job. The job sheets are the subsidiary ledger to the Work In Process inventory account.
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What is a bil of materials?
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A document that lists the type and quantity of each item of materials needed to complete a unit of product.
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What is a materials requisition form?
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A document that 1) specifies the type and quantity of materials to be drawn from the storeroom or purchased and 2) identifies the job to which the materials are to be charged.
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How do companies measure direct labor costs?
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Wages, benefits and taxes, time tickets, or bar codes.
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What is on a time ticket?
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An employee enters the job number and notes the number of hours spent on a particular task.
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What is a predetermined overhead rate?
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Used to apply or assign the manufacturing (factory) overhead to the specific products or jobs. (In larger companies, multiple predetermined overhead rates are often used.)
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What is the formula for the predetermined overhead rate?
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estimated total manufacturing overhead costs / estimated total units in allocation base
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What is the formula for manufacturing overhead applied?
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overhead rate X actual total units.
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What is the predetermined overhead rate based on?
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Estimates rather than acutal results.
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The estimated total units in the ____ ____ is an activity measure such as direct labor hours, machine hours, or units of product used to assign overhead costs to products or services.
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Allocation base
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An allocation base should be used that acts as a ____ ____.
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Cost driver
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What is a cost driver?
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A factor that causes overhead.
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What is the benefits of using predetermined overhead rather than acutal overhead?
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Gives the overhead cost for a completed job immediately, eliminates seasonality, and simplifies record keeping.
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Because estimates were used to calculate the predetermined overhead rate, acutal overhead costs are likely to differ from manufacturing overhead applied resulting in _____ or ____ overhead.
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underapplied; overapplied.
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What kind of account is manufacturing overhead?
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Control (clearing) account.
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What is underapplied?
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the amount of the overhead costs assigned to the products was less than the actual overhead.
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What is overpplied?
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The amount of the overhead costs assigned to products was greater than the actual overhead.
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If the over- or under-applied amount is small, it is usually closed out to what account?
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Cost of Goods sold.
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More properly (GAAP), the over- or under-applied amount is prorated to the....
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Work in Process inventory, Finished goods inventory, and cost of goods sold accounts.
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There are 3 inventory control accounts in a job order system. Identify the control accounts and their subsidiary ledgers.
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Raw materials inventory, Work in Process inventory, and finished goods inventory. The job cost sheets are the subsidiary ledgers to the work in process inventory account.
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What source documents are used in accumulating direct labor costs?
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Time tickets and time cards
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How can the agreement of Work in Process inventory and job cost sheets be verified?
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The balance in the work in process inventory should equal the sum of the costs shown on the job cost sheets of unfinished jobs.
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"At the end of the year, under-or overapplied overhead is closed to the income summary." Is this correct?
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No. The under- or overapplied amount is prorated to the Work in Process inventory, Finished Goods inventory, and cost of goods sold accounts.
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