Chapter 2 Managerial Accounting

Three types of absorption costing

job ordering costing, process costing, activity based costing

Type of costing that has a unique nature to each order that requires tracing or allocating costs to each job and maintaining cost records for each job

job order costing

Examples of job order costing

aircraft, construction projects, accounting firms, custom printing, auto repair shops

True or false: For job costing, a job may be a single unit or a batch of units.

True

What is unique about job costing?

The units produced for one job are not the same as the units produced for another job

What does a job cost sheet track?

direct materials, direct labor, and manufacturing overhead for each job

what does a materials requisition form contain?

direct materials that are used in production

what does a time ticket contain?

direct labor

What is used to estimate overhead to apply it to WIP inventory?

Predetermined overhead rate (POHR)

When is the POHR determined?

Before the period begins

What is the formula for MOH applied to a job?

POHR x Actual Allocation Base for that Job

What is the formula for total cost of job?

direct materal +direct labor + applied MOH

What is the formula for unit product cost

total cost of job/ # of units produced

What is the formula for POHR?

Estimated total MOH for the coming period/estimated total units in allocation base for coming period

3 Steps for computing POHR before actual formula

1. estimate allocation base

2. estimate total fixed and variable MOH cost

3. Y = a +bx

4. Compute POHR

What does a job cost sheet collectively form?

a subsidiary ledger