Accounting 2 Chapter 2

Bill of Materials

A document that lists the type and quantity of each type of direct material needed to complete a unit of product

Materials Requisition Form

A document that specifies the type and quantity of materials to be drawn from the storeroom and identifies the job that will be charged for the cost of the materials.

Cost Driver

A factor such as machine-hours, beds occupied, computer time, or flight-hours that causes overhead costs

Allocation Base

A measure such as direct labor-hours (DLH) or machine-hours (MH) that is used to assign overhead costs to products and services.

Absorption Costing

All manufacturing cost, both fixed and variable, are assigned to units of product-- units are said to fully absorb manufacturing costs.

Time Ticket

An hour-by-hour summary of the employee's activities throughout the day

When is the predetermined overhead rate computed?

Before the period begins

Finished Goods

Completed units of product that have not yet been sold to customers.

Work in Process

Consists of units of product that are only partially complete and will require further work before they are ready for sale to the customer.

The amount transferred from Work in Process to Finished Goods is referred to as the...?

Cost of Goods manufactured

What are the most widely used allocation bases in manufacturing?

Direct Labor-Hours, Machine-Hours, Direct Labor Costs, and Units of Product.

Cost of Goods Manufactured

Includes the manufacturing costs associated with the goods that were finished during the period

Product Costs

Raw materials purchases, direct labor, manufacturing overhead

Job-Oder Costing

Used in situations where many different products are produced each period.

Raw Materials

`Any materials that go into the final product

Job cost sheet

Records the materials, labor, and manufacturing overhead costs charged to that job.

Period Costs

Selling and administrative