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Activity Base
A measure of whatever causes the incurrence of a variable cost, used to allocate overhead costs.
Actual Costing System
A costing system that assigns actual costs of direct materials, direct labor, and overhead to products.
Cost Accounting
The process of tracking, recording, and analyzing costs associated with the products or activities of an organization.
Cost Accounting System
The framework used by companies to estimate the cost of their products for profitability analysis, inventory valuation, and cost control.
Job Cost Sheet
A document that records the materials, labor, and overhead costs for an individual job.
Job-Order Cost System
A costing system used when products are manufactured based on specific customer orders, and each product produced is considered a job.
Materials Requisition Slip
A document used to request the issuance of materials from the storeroom to the production floor.
Normal Costing System
A costing system that assigns actual costs of direct materials and direct labor to products, but uses a predetermined overhead rate to allocate overhead costs.
Over-Applied Overhead
When the overhead assigned to work in process is greater than the overhead incurred.
Predetermined Overhead Rate
A rate used to allocate manufacturing overhead to individual jobs, calculated before the period begins.
Process Cost System
A costing method used where similar items are produced in a continuous process, assigning costs to each process or department.
Proration
The process of allocating under- or over-applied overhead to cost of goods sold, finished goods, and work-in-process inventory.
Summary Entry
A journal entry that summarizes multiple transactions, often used to record all the costs associated with a job.
Time Ticket
A document that records the amount of time an employee spends on each job, used to allocate labor costs.
Under-Applied Overhead
When the overhead assigned to work in process is less than the overhead incurred.
Conversion Costs
Costs that include both direct labor and manufacturing overhead.
Cost Reconciliation Schedule
A schedule that shows the flow of costs into and out of the work-in-process account, ensuring all costs are accounted for.
Equivalent Units Of Production
The number of units that could have been completed given the amount of work done during a period, accounting for partially completed units.
First-In, First-Out (Fifo) Method
An inventory valuation method that assumes the earliest goods purchased are the first to be used or sold.
Operations Costing
A hybrid costing system used when products have some common characteristics and some individual characteristics.
Physical Units
The actual number of units in production, including both completed and incomplete units.
Process Cost System
A costing method used where similar items are produced in a continuous process, assigning costs to each process or department.
Production Cost Report
A report that provides information about the cost of production for each department, including costs transferred in and out and ending inventory.
Total Units Accounted For
The sum of units completed and transferred out plus units in ending work-in-process inventory.
Total Units To Be Accounted For
The sum of units started and units in beginning work-in-process inventory.
Transferred-In Cost
Costs incurred in previous departments that are carried forward as the product moves to the next department.
Unit Production Costs
The cost incurred to produce one unit of product, including materials, labor, and overhead.
Weighted-Average Method
An inventory costing method that averages the costs of beginning inventory with the costs of production during the period.
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