Flashcards in ACCT2012 Lecture 3 Deck (10):
Inventorial Product Costs
Direct + Indirect costs of producing goods
*consists of manufacturing process costs only
Process for assigning costs to custom products
*cost objects = individual jobs
*DM, DL traced to particular job (by source docs)
*manufacturing overhead allocated (i.e. all production costs - DM - DL)
group of individual costs that are accumulated for a particular purpose.
allocation rate = actual costs / actual quantity of AB
allocation rate = estimated costs / estimated quantity of AB
applied overhead = estimated rate x actual quantity of AB
actual costs are less (more) than total amount of overhead allocated
*Under normal costing, periodic adjustments are needed to reconcile
approach for assigning product costs to mass‐produced products.
2 stage process
1. Costs are assigned to departments
2. Allocated from departments to individual product units.
DL + Manufacturing Overhead