Managerial accounting chp 2 . vocab

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.

Cost Driver/ Allocation Base

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

Which of the following would not be considered a job in a service firm that uses job-order costing? mc A patient in a hospital A client at a law firm A repair job at an auto repair shop The tax department in an accounting firm

The tax department in an accounting firm

bill of materials

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

plantwide overhead rate

a single predetermined overhead rate that is used throughout a plant

cost-plus pricing

adding a standard markup to the cost of the product (ex: 100 dollars for total manufactoring cost, managers will do 100 dollar x 50% then add the 50% to the 100 dollars, now being cost plus pricing.

why do companies use a predetermined overhead rate rather than actual overhead rate

an acutal overhead rate is not known until the end of the period

Manufacturing Overhead

contains fixed costs, in an indirect cost, consists of many different types of costs

most widely used allocation bases in manufacturing are

direct labor hours, direct labor cost, machine hours, and units of product

Widely used allocation bases in manufacturing are:

direct labor hours, machine hours, direct labor cost, units of product

the total cost of a job includes

direct labor, direct materials, and applied manufacturing overhead

rue or false: The root cause of inaccurately assigning costs to jobs is generally due to poor tracking of direct labor costs.

false

Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing? Multiple choice question. The wages of technicians at an auto repair shop The salary of a surgeon at a hospital The salary of an attorney at a law firm The salary of the manager at a hair salon

hair salon one

a job-order costing system may inaccurately assign costs to jobs due to

inappropriate allocation base

the adjustment for underapplied overhead ___ net income

increase cogs and decrease

manufacturing overhead consists of

many different kinds of indirect costs

overhead applied to a particular job

predetermined overhead rate x amount of the allocation base incurred by the job

overhead application

process of assigning overhead cost to jobs

job cost sheet

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

True or false: One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.

true

Job Order Costing

used in situations where many different products, each with individual and unique features, are produced each period

estimated total manufacturing overhead formula

y = a + b(x)

co. generally classify manufacturing costs in three categories

direct materials, direct labor, and manufactoring overhead.

total cost of a job is cal by adding

dm, dl, applied m overhead cost

Predetermined Overhead Rate

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

Which of the following would be considered direct materials in a service firm that uses job-order costing? Multiple choice question. Paperwork at a law firm Scissors at a hair salon Beds in a hospital Tools in an auto repair shop paperwork at law firm

law firm paperwork

Direct materials costs are recorded on the job cost sheet when the ______

materials are issued to the job

an allocation base in an

measure of activity used to assign overhead costs to products and services

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find _

overhead applied to the job