ACC 102: Chapter 3

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 (DHL) or machine-hours (MH) that is used to assign overhead costs to products and services

Absorption Costing

All manufacturing costs, both fixed and variable are assigned to units of production, units are said to fully absorb manufacturing costs

Time Ticket

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

Normal Cost System

Applies overhead to jobs by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the jobs

Predetermined Overhead Rate

Computed by dividing the total estimated manufacturing overhead cost for the period by the estimated total amount of the allocation base

Finished Goods

Consist of 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

Schedule of cost of goods manufactured

Contains three elements of product costs, direct labor, direct materials 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 to finished goods

Schedule of cost of good sold

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

Cost of Goods Manufactured

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

Overhead Application

Process of assign overhead cost to jobs

Job Cost Sheet

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

Plantwide Overhead Rate

Single predetermined overhead rate for an entire facotry

Underapplied or Overapplied Overhead

The difference between the overhead cost applied to Work In Process and the actual overhead cost of a period

Job-Order Costing

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

Multiple Predetermined Overhead Rate

each production department may have its own predetermined overhead rate