Chapter 5 Flashcards
(21 cards)
Involves putting together materials, labor, and overhead to produce a new product
Manufacturing
Characterized by its intangible nature
Service
Nonphysical nature of services
Intangibility
Service cannot be inventories bust must be consumed when performed
Perishability
Production and Consumption cannot be separated
Inseparability
greater chances for variation in the performance of services than in the production of goods
Heterogeneity
Refers to the recognition and recording of costs.
Cost Accumulation
Classifying costs and consists of determining the dollar amounts of direct materials, direct labor, and overhead
Cost Measurement
use actual costs for direct materials, direct labor, and overhead to determine unit cost
Actual Costing System
use actual costs for direct materials, and direct labor but measure overhead costs on a predetermined basis
Normal Costing System
Production level the firm expects to attain
Expected Activity level
average activity usage the firm experiences in the long run
Normal Activity Level
Absolute maximum production if all goes perfectly
theoretical activity level
maximum output if everything operated efficiently
Practical activity level
document that identifies each job and accumulates its manufacturing costs and reflects materials, labor, and overhead costs for the job and serves as a subsidiary ledger to the WIP acct.
Job Order Cost Sheet
Cost of Materials is traced to each job through the use of a
materials requisition form
source documents used to assign labor costs to jobs
Job Time Tickets
Overhead is assigned to jobs using
PREDETERMINED rates
natural result of a production process because mistakes are made. defective units are either thrown away or reworked and sold
Spoilage
If defective work was the fault of the demanding nature of the job, then spoilage is assigned to
the JOB
If defective work was the fault of untrained labor the spoilage is assigned to
OVERHEAD CONTROL
