Chapter 17
Labor time record
a record used to assign direct labor cost to specific jobs
Overhead is overallocated
actual cost < allocated costs
Overhead is underallocated
actual cost > allocated costs
Manufacturing Overhead
allocated to the Work-In-Process inventory account using the predetermined overhead allocation rate
Underallocated overhead
occurs when the actual manufacturing overhead cost are more than allocated manufacturing overhead costs
Overallocated overhead
occurs when the actual manufacturing overhead costs are less than allocated manufacturing overhead cost
Allocated manufacturing overhead cost equation
predetermined overhead allocation rate X actual quantity of the allocation base used for each job
Finished Goods Inventory; debit
A manufacturing company completed work on a job. The cost of the job is transferred into _____ with a ______.
Increase
Does labor incurred increase or decrease wages payable?
WIP Inventory is debited and Manufacturing Overhead is credited
Give the journal entry for the allocation overhead
Finished goods inventory is debited and WIP Inventory is credited
Give the journal entry for the completion of a job
Overallocated
If a company incurred $5,250 in actual overhead costs and allocated $5,575 to jobs, was the overhead account for overallocated or underallocated overhead?
jobs
Job order costing accumulates costs by....
processes
Process costing accumulates costs by...
Job Order Costing
Used by companies that manufacture unique products or provide specialized services
Process Costing
Used by companies that produce identical units through a series of uniform processes
Asset
What type of account is Finished Goods inventory?
Cost of Goods Manufactured
When a company finishes a job, it totals the cost and transfer them to Finished goods inventory
work in process inventory
When a manufacturing company uses direct labor, it assigns the cost by debiting...
work in process inventory
When a manufacturing company uses direct materials, it assigns the cost by debiting...
Manufacturing Overhead
When a manufacturing company uses indirect materials, it accumulates the cost by debiting...
Cost of Goods Sold
When the job's units are sold, the costing system moves the costs from finished goods to ...
Process Costing
Would a cell phone manufacturer use job order or process costing?
Job Order Costing
Would an advertising agency use job order or process costing?
Allocation base
a denominator that links indirect costs to cost objects. Ideally, the allocation base is the primary cost driver of the indirect costs
Materials requisition
a document that requests the transfer of raw materials to the production floor
Job cost record
a document that shows the direct materials, direct labor, and manufacturing overhead costs for an individual job
Raw Materials Subsidiary Ledger
allows for better control of inventory as it helps track the quantity and cost of each type of material used in production
Job order costing
an accounting system that accumulates costs by job. Used by companies that manufacture unique products or provide specialized services
Cost accounting systems
an accounting system that measures, records, and reports product costs
Subsidairy ledger
contains details of a general ledger account and the sum of the accounts in this ledger equals the balance in the general ledger account
Unit product cost equation
cost of goods manufactured / total units produced
Predertermined overhead allocation rate definition
estimated overhead cost per unit of the allocation base; calculated at the beginning of the accounting period
Cost driver
the primary factor that causes a cost to increase or decrease
Job
the production of a single unique product or specialized service, or a batch of unique products
Predetermined overhead allocation rate equation
total estimated overhead costs/total estimated quantity of the overhead allocation base
at the end of the period
when is the manufacturing overhead account adjusted?
