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Flashcards in product costing Deck (24):
0

what is product costing

determining the costs of products in inventory or sold to customers

1

what are product costs

recorded as an asset in the inventory until the product is sold

2

what are period costs

costs that are recorded as expenses in the period in which they are incurred

e.g. sg&a expenses
interest expenses

3

types of product costs

direct materials

direct labour

manufacturing overhead

4

what is an overhead

includes all manufacturing costs except for materials and labour

like property taxes, insurance

5

what are balance sheet inventories for cost accounting

raw materials

work in progress

finished goods

6

predetermined overhead rate

estimated total manufacturing overhead cost for the coming period / estimated total units in the allocation base for the coming period

7

overhead applied

POHR x actual activity

8

if manufacturing overhead is under applied

applied OH is less than actual OH

9

if manufacturing overhead is overapplied

applied OH is greater than actual Ohm

10

under and overapplied overhead for smaller amounts (close to cost of goods sold) - where to allocate

COGS

11

under and overapplied overhead allocation

work in progress, finished goods or cost of goods sold

12

purchase of raw materials on account

purchase of materials is recorded in raw materials (debited)

13

cost of raw materials is transferred to...

use of direct materials is recorded in work in process (debited) and raw materials (credited)

14

direct costs for the month....

direct labor cost increase work in process (debited) and increase wages payable (credited, liability)

15

actual manufacturing overhead costs incurred for the month....

actual overhead costs, as incurred, increase manufacturing overhead (debited) and increase accounts payable or accrued wages payable

16

manufacturing overhead is applied to work in process using POGR and actual activity

manufacturing overhead is applied to WIP (debited) using POHR and actual activity rate

17

if actual and applied manufacturing overhead are not equal at the end of fiscal period....

adjustment is required.

18

when is the manufacturing overhead account cleared?

at the end of the year

19

cost of goods sold transfered from work in process to finished goods

when the goods are completed, they are moved from work in process (balance sheet, credited) to finished goods inventory (balance sheet, debited)

20

cost of goods sold is transfered from finished goods inventory to COGS in income statement

when the goods are sold, they are transfered from balance sheet (credited) to cogs in income statement (debited)

21

absorption costing

all manufacturing costs are absorbed in the cost of the product

22

variable costing

direct materials, direct labor, variable manufacturing overhead treated as product costs

fixed manufacturing overhead, variable and fixed selling and administrative expenses treated as period costs

23

ABC method

allocates overhead costs to products