ch3

Job cost sheet

A form that records the direct materials, direct labor, and manufacturing overhead cost charged to a job.

Cost of Goods Sold

As jobs are sold, their costs are transferred from Finished Goods to ___________________________.

Finished Goods

Once units of production are complete, their manufacturing costs are transferred from Work in Process to ________________________

direct labor cost

To transform direct materials into completed jobs, ______________________ is added to Work in Process and manufacturing overhead cost is applied to Work in Process by multiplying the predetermined overhead rate by the actual quantity of the allocation base consumed by each job

manufacturing overhead

all manufacturing costs other than direct materials and direct labor are classified as _____________________________________ costs

schedule of cost of goods sold

also contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and it summarizes the portions of those costs that remain in ending Finished Goods inventory and that are transferred out of Finished Goods into Cost of Goods Sold

Job-order costing

A costing system used in situations where many different products, jobs, or services are produced each period.

understated

When overhead is underapplied, manufacturing overhead costs have been _________________ and therefore inventories and/or cost of goods sold must be adjusted upwards

income statement

When units of production are sold their associated costs are transferred from Finished Goods to Cost of Goods Sold on the _____________________________.

selling and administrative costs

__________________________________________________. These costs should be treated as period expenses and charged directly to the income statement

actual

________________manufacturing overhead costs are debited to the account as they are incurred throughout the year

Finished goods

consist of completed units of product that have not yet been sold to customers

Absorption Costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in unit product costs.

Normal costing

A costing system in which overhead costs are applied to a job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job.

costs

A transfer of _________________is made within the costing system that parallels the physical transfer of goods to the finished goods warehouse.

allocation base

A measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects.

Predetermined overhead rate

A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period.

Nonmanufacturing costs

______________________________________ should not go into the Manufacturing Overhead account

Work in Process, Finished Goods, and Cost of Goods Sold

Closing the underapplied or overapplied overhead to _______________________________________________________________________ is more accurate than the simpler approach of closing it out to Cost of Goods Sold.

Total manufacturing costs + Beginning work in process inventory − Ending work in process inventory

Cost of goods manufactured =

predetermined overhead rate x amount of allocation base incurred by job

Overhead application rate:

asset

Raw Materials is an ___________ account.

predetermined overhead rate by the actual quantity of the allocation base

To transform direct materials into completed jobs, direct labor cost is added to Work in Process and manufacturing overhead cost is applied to Work in Process by multiplying the _____________________________________________________________________________________________________ consumed by each job

Direct materials + Direct labor + Manufacturing overhead applied to work in process

Total manufacturing costs =

Beginning finished goods inventory + Cost of goods manufactured − Ending finished goods inventory

Unadjusted cost of goods sold =

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.

schedule of cost of goods manufactured

contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and it summarizes the portions of those costs that remain in ending Work in Process inventory and that are transferred out of Work in Process into Finished Goods

Raw materials

include any materials that go into the final product

work in process

Direct materials are added to _____________________________ along with direct labor and applied overhead

Work In Process

Direct materials goes into ____________________

manufacturing overhead

Indirect materials goes into ____________________________________

applied overhead cost

Only the ____________________________, based on the predetermined overhead rate, appears on the job cost sheet and in the Work in Process account.

period incurred

Period costs (or selling and administrative expenses) are recorded as expenses on the income statement in the __________________________

inventories

Period costs (or selling and administrative expenses) do not flow through ____________________ on the balance sheet

Estimated total manufacturing overhead cost / Estimated total amount of the allocation base

Predetermined overhead rate:

units of production

Selling and administrative expenses are not attached to _________________________

clearing account

The Manufacturing Overhead account operates as a ________________________.

overapplied

if there is a credit balance in the Manufacturing Overhead account of Y dollars, then the overhead is ___________________________by Y dollars.

underapplied

if there is a debit balance in the Manufacturing Overhead account of X dollars, then the overhead is ___________________________ by X dollars

overstated

When overhead is overapplied, manufacturing overhead costs have been __________________and therefore inventories and/or cost of goods sold must be adjusted downwards.

Work in Process

Actual overhead costs are not charged to jobs; actual overhead costs do not appear on the job cost sheet nor do they appear in the ____________________________ account

income statement

At the Cost of Goods Sold, the various costs attached to each job are finally recorded as an expense on the ___________________________

Work in Process, Manufacturing Overhead

When jobs are completed (or at the end of an accounting period), overhead cost is applied to the jobs using the predetermined overhead rate—____________________ is debited and _________________________________ is credited

Finished Goods inventory

When jobs are completed, their costs are transferred from Work in Process to _________________________________________

income statement

Selling and administrative expenses are recorded as expenses on the ______________________ as incurred.

debit

The _________________side of the Manufacturing Overhead account is always used to record the actual manufacturing overhead costs, such as indirect materials, that are incurred during the period

credit

The ___________side of Manufacturing Overhead account is always used to record the manufacturing overhead applied to work in process.

cost of goods manufactured

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

cost of goods manufactured

The costs of the completed job are transferred out of the Work in Process account and into the Finished Goods account. The sum of all amounts transferred between these two accounts represents the ______________________________ for the period

Overhead application

The process of assigning overhead costs to specific jobs

balance sheet

Until Cost of Goods Sold, these costs are in inventory accounts on the ______________________

unit product cost

sometimes only a portion of the units involved in a particular job will be immediately sold. In these situations, the _________________________ must be used to determine how much product cost should be removed from Finished Goods and charged to Cost of Goods Sold

Work in Process

the overhead cost applied to _________________________ will generally differ from the amount of overhead cost actually incurred

understated

when overhead is underapplied it means two things—not enough overhead cost was applied to jobs and the cost of goods sold is ___________________. Adding the underapplied overhead to the cost of goods sold corrects this understatement.