Ch 3

Predetermined Overhead Rate

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

Total Manufacturing Costs

Direct Materials + Direct Labor + Manufacturing overhead applied to work in process

Manufacturing Costs

Direct materials, direct labor, and manufacturing overhead

Unit Product Cost

It is the same as the "total job cost divided by number of units," and "average product cost per unit."

Overhead Allocation

The process used to assign overhead costs to products

Labor costs

They are accounted for on time ticket

Work in Process

Units that are only partially complete

Bill of materials

a document that lists the type and quantity of each type of direct material needed to complete a unit of product. -the quantity of materials to be drawn from the storeroom is on the materials requisition form. -quantity of each 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.

Time ticket

a document used to record how long workers spend on each job and task

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 (DLH) 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 products

The 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.

Manufacturing Overhead

include material and labor, consists of only manufacturing costs, indirect costs