ACC 202 - Chapter 2 Calculating Unit Product Costs

job-order costing

1. Many different products are produced each period 2. Products are manufactured to order 3. The unique nature of each order requires tracing or allocating costs to each job, and maintain cost records for each job

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.

bill of materials

A document that shows the quantity of each type of direct material required to make a product.

job cost sheet

A form that records the direct materials, direct labor, and manufacturing overhead cost charged to a job.

activity-based costing

When a company creates overhead rates based on the activities that it performs, it is employing an approach called:

cost driver

a factor that causes overhead costs is called a:

allocation base

a measure of activity such as direct labor-hours or machine-hours that's used to assign costs to cost objects

period costs

all nonmanufacturing costs are treated as ________ _________ and they are not assigned to units of product.

units of products

all nonmanufacturing costs are treated as period costs and they aren't assigned to ____________________.

1. MO is an indirect cost 2. MO consists of many different types of costs 3. many companies have large amounts of fixed MO and remains relatively constant from one period to the next even though the number of units they produce can fluctuate widely

assigning manufacturing overhead (MO) to a specific job is complicated by 3 circumstances:

- value ending inventory - understand product profitability - establish selling prices

companies assign costs to products and services to:

A, D

costs assigned to units of product under absorption costing include: (separate letters with comma) A) variable manufacturing B) variable nonmanufacturing C) fixed nonmanufacturing D) fixed manufacturing

materials are issued to the job

direct materials costs are recorded on the job cost sheet when the:

multiple predetermined overhead rate system

each production department may have its own predetermined overhead rate in a what?

unit product cost

in a job-order costing system, costs are traced and allocated to jobs and then the costs of the job are divided by the number of units in the job to arrive at an average cost per unit; this average cost per unit is also referred to as the:

a document that specifies the type and quantity of materials to be drawn from the storeroom and identifies the job that'll be charged for the cost of the materials; form used to control the flow of materials into production and also for making journal entries in the accounting records

materials requisition form

estimated

predetermined overhead rate

decreases; increases

the adjustment for overapplied overhead ____________ cost of goods sold and _______________ net operating income.

increases; decreases

the adjustment for underapplied overhead ____________ cost of goods sold and _______________ net operating income.

time ticket

the document used to record the time workers spend on each job and task is called a:

C

the predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find: A) actual overhead B) the total cost of the job C) overhead applied to the job D) the predetermined overhead rate for the job

overhead application

the process of assigning overhead costs to specific jobs using the following formula: overhead applied to a particular job = predetermined overhead rate X amount of the allocation base incurred by the job

application

the process used to assign overhead costs to products is called overhead ____________________.

divide the total job cost by the number of units produced

to calculate the unit product cost using the job cost sheet:

difference between overhead applied to work in process and actual overhead

underapplied or overapplied overhead is the:

- materials - labor - manufacturing overhead

what does a job sheet record?

1. direct materials cost 2. direct labor cost 3. applied manufacturing overhead cost

what three things go into calculating the total cost of a job?

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

widely known allocation bases in manufacturing are: