Accounting 17

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process costing

System for assigning costs to large numbers of identical units that usually proceed in a continuous fashion through a series of uniform productions steps or processes.

allocation base

a common denominator that links indirect costs to cost objects. ideally, Ideally, the primary cost driver of the indirect costs

job order costing

a system that accumulates costs for each job. law firms, music studios, health-care, providers, mail-order catalog companies, building contractors, and custom furniture manufacturers are examples of companies that use job order costing systems

equivalent units

allows us to measure the amount of work done on partially finished group of units durring a period and expresses it in terms of fully complete units of outputs

cost tracing

assigning direct costs (such as direct materials and direct labor) to cost objects (such as jobs or production processes) that used those costs

cost allocation

assigning indirect costs (such as manufacturing overhead) to costs objects (such as jobs or production processes)

transfered-in cost

cost were incurred in a previous process and brought into a later process as part of the products cost

weighted-average process costing method

determines the average cost of all of a specific departments equivalent units of work

conversion cost

direct labor plus manufacturing overhead

job cost record

document that accumulates the direct materials, direct labor, and manufacturing overhead costs assigned to an individual job

predetermined manufacturing overhead rate

estimated manufacturing overhead cost per unit of the allocation base, computed at the beginning of the period

labor time record

identifies the employee, the amount of time spent on a particular job, and the labor cost charged to the job; a record used to assign direct labor costs to specific jobs

underallocated (manufacturing) overhead

occurs when the manufacturing overhead allocated to WIP inventory is less than the amount of manufacturing overhead costs actually incurred

overallocated (manufacturing) overhead

occurs when the manufacturing overhead allocated to WIP inventory is more than the amount of manufacturing overhead costs actually incurred

materials requisition

request for the transfer of materials to the production floor, prepared by the production team

production cost report

summarizes operation for one department for a month. comines the cost to accounts for the cost per equivalent unit and shows how these costs were assigned to the goods completed and transfered out

cost drivers

the primary factor that causes a cost to increase or decrease based on the factors users


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