Managerial Accounting Chapter 3

Job order costing

A costing system used in situations
where many different products, jobs, or services are
produced each period

Absorption Costing

A costing method that includes all
manufacturing costs—direct materials, direct labor, and
both variable and fixed manufacturing overhead—in the
cost of a product.

Allocation base

measure of activity such as DL hours or machine hours that is used to assign costs to cost objects

Overhead application

process of assigning overhead costs to specific jobs using the formula

= predetermined overhead rate * amount of allocation base incurred by the job

normal costing

overhead costs are applied to a job by multiplying a predetermined overhead rae by the actual amount of the allocation base incurred by the job

job cost sheet

form that records the DM, DL, and MOH cost charged to a job

COGSM and COGS contain 3 types of costs

DM, DL, MOH

the schedules calculate

1. the cost of raw material and direct labor used in
production and the amount of manufacturing
overhead applied to production.
2. the manufacturing costs associated with goods
that were finished during the period.