Accounting 17
process costing
System for assigning costs to large numbers of identical units that usually proceed in a continuous fashion through a series of uniform productions steps or processes.
allocation base
a common denominator that links indirect costs to cost objects. ideally, Ideally, the primary cost driver of the indirect costs
job order costing
a system that accumulates costs for each job. law firms, music studios, health-care, providers, mail-order catalog companies, building contractors, and custom furniture manufacturers are examples of companies that use job order costing systems
equivalent units
allows us to measure the amount of work done on partially finished group of units durring a period and expresses it in terms of fully complete units of outputs
cost tracing
assigning direct costs (such as direct materials and direct labor) to cost objects (such as jobs or production processes) that used those costs
cost allocation
assigning indirect costs (such as manufacturing overhead) to costs objects (such as jobs or production processes)
transfered-in cost
cost were incurred in a previous process and brought into a later process as part of the products cost
weighted-average process costing method
determines the average cost of all of a specific departments equivalent units of work
conversion cost
direct labor plus manufacturing overhead
job cost record
document that accumulates the direct materials, direct labor, and manufacturing overhead costs assigned to an individual job
predetermined manufacturing overhead rate
estimated manufacturing overhead cost per unit of the allocation base, computed at the beginning of the period
labor time record
identifies the employee, the amount of time spent on a particular job, and the labor cost charged to the job; a record used to assign direct labor costs to specific jobs
underallocated (manufacturing) overhead
occurs when the manufacturing overhead allocated to WIP inventory is less than the amount of manufacturing overhead costs actually incurred
overallocated (manufacturing) overhead
occurs when the manufacturing overhead allocated to WIP inventory is more than the amount of manufacturing overhead costs actually incurred
materials requisition
request for the transfer of materials to the production floor, prepared by the production team
production cost report
summarizes operation for one department for a month. comines the cost to accounts for the cost per equivalent unit and shows how these costs were assigned to the goods completed and transfered out
cost drivers
the primary factor that causes a cost to increase or decrease based on the factors users