ACCT 320 Ch 2 SG

job order costing

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

job order costing is used when:

1. many different products are produced each period

2. products are manufactured to order custom

3. the unique nature of each order requires tracing or allocation

materials requisition form

document specifying the type and quantity of materials to be drawn from storeroom and the job charged for the cost of those materials

job cost sheet

form that records the direct materials, direct labor, and manufacturing overhead cost charged to the job

time ticket

document that records the amount of time an employee spends on various activities

predetermined overhead rate

rate used to charge manufacturing overhead cost to jobs that is established in advance for each period

predetermined overhead rate equation

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

overhead applied

POHR x actual direct labor hours worked on the job

cost driver

a factor that causes overhead costs

underapplied/ overapplied overhead calculation

overhead applied- actual overhead

overapplied overhead

more overhead than actually incurred

underapplied overhead

less overhead than actually incurred

plantwide overhead rate

single predetermined overhead rate used throughout a plant

multiple overhead rates

multiple overhead cost pools and different predetermined overhead rate for each cost pool; each production department may be treated as a separate overhead cost pool

why multiple overhead may be more accurate

it accurately measures demands of jobs, products, customers, and other cost objects make on overhead resources