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EXAM 2
ACCTG
| Question | Answer |
|---|---|
| Cost accounting system | accumulates production costs and assigns them to products and services – control costs and set selling prices |
| job order production | each customized product manufactured separately; custom home, jewelry, tattoos, etc |
| job lot | when a job involves producing more than one unit of a custom product - Low standardization, high flexibility, low production volume |
| job cost sheet | record cost chargeable to a specific job - collects total costs and unit costs of the completed job - summarize DM, DL and MOH applied |
| receiving report | used to record materials received in a materials ledger card |
| materials ledger card | are perpetual records that are updated each time materials are produced and each time materials are issued for use in production |
| time tickets | track how much time employees spend on each job – recorded in one journal entry |
| predetermined overhead rate | estimated annual overhead cost/ estimated annual operating activity - during budgeting process |
| underapplied MOH | positive (left) MOH balance, the overhead assigned to WIP is less than the overhead incurred – DR COGS, CR MOH |
| overapplied MOH | negative (right) MOH balance, the overhead assigned to WIP is more than overhead incurred – DR MOH, CR COGS |
| process cost system | cost accumulation over a period of time |
| process operations | the mass production of large quantities of similar products in a continuous flow of steps - homogenous, large volumes |
| plantwide overhead rate | one overhead rate, traditional approach, volume based measures, cost assignment for unit of the product |
| departmental rate | 2 or more overhead rates, volume based by department, improves accuracy and decision making, 3 step process |
| departmental process | assign overhead to departments cost pool, choose allocation base, apply overhead to products |
| activity based costing | many overhead rates, based on activities, most accurate and expensive |
| activity | any event, action, business transaction or work sequence that incurs costs. These are activities that occur when the business is producing a product or performing a service |
| cost pool | the overhead cost attributed to a distinct activity (storing, assembly, purchasing, etc) |
| cost driver | : any factor or activity that has a direct cause-effect relationships with the resources consumed (# of purchase orders, etc) |
| ABC limitations | expensive, complex, arbitrary allocation costs still exist |
| when to use ABC | differing product line volumes and complexity, overhead costs are significant, product lines require different resources and support, etc |
| overhead cost per unit | total allocated cost/total units produced |
| total allocated cost | sum of each allocated activity cost |
| total job cost | DM + DL + MOH |
| COGS | beg. FG + COGM - end FG |
| two types of cost accounting systems | job order and process cost |
| low volume products | require more special handling than high volume |
| ABC process | Identify activities and assign costs to cost pools, Compute overhead activity rate for each cost pool, Assign overhead costs to products |
| job order system | company assign costs to each job or batch of goods, goods often customized orders, one WIP account is used, compute cost per job |
Created by:
kayleejh0829