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.