Chapter 3 - Product Costing and Cost Accumulation in a Batch Production Environment

These flashcards cover key concepts related to product costing and cost accumulation in manufacturing environments as outlined in the lecture notes.

Product Costing

The process of determining the total costs involved in manufacturing a product.

Cost of Goods Sold (COGS)

The total cost attributable to the goods that were sold during a specific period.

Work-in-Process Inventory

The total cost of unfinished goods in the manufacturing process.

Finished-Goods Inventory

The total cost of completed goods that are available for sale.

Direct Materials

Raw materials that are directly used in the production of finished goods.

Direct Labor

Wages paid to workers who are directly involved in producing goods.

Manufacturing Overhead

Indirect costs related to manufacturing that cannot be traced directly to specific products.

Job-Order Costing

A cost accounting system that assigns costs to specific production batches or jobs.

Process Costing

A cost accounting method used where goods are produced in mass and are indistinguishable from one another.

Predetermined Overhead Rate (POHR)

An estimated rate used to apply manufacturing overhead to jobs based on a specific activity base.

Underapplied Overhead

When the actual overhead costs exceed the applied overhead costs.

Overapplied Overhead

When the applied overhead costs exceed the actual overhead costs.

Material Requisition

A document approving the transfer of materials to a specific job.

Time Card

A record of the time an employee spends working on given jobs.

Cost Summary

A summary detailing the total costs allocated to direct materials, labor, and overhead for a job.

Income Statement

A financial statement that summarizes revenues and expenses, providing a net income figure.

Two-Stage Cost Allocation

A method that assigns indirect costs to cost pools before allocating them to products based on a specific driver.

Batch Production

A manufacturing method that produces goods in batches or groups rather than on a continuous basis.