Managerial Accounting Chapter 2 – Flashcards

Accounting system for manufacturing activities based on the perpetual inventory system

Accounting system for manufacturing activities based on the periodic inventory system

Production of special-order products; also called customized production,

Production of a customized product or service

Production of more than one unit of a customized product or service

Maximum allowable cost for a product or service; defined as expected selling price less the desired profit

Cost accounting system to determine the cost of producing each job or job lot

Separate record maintained for each job

Account in which costs are accumulated for products that are in the process of being produced but are not yet complete; also called work in process inventory.

Account that controls the finished goods files, which acts as a subsidiary ledger (of the Inventory account) in which the costs of finished goods that are ready for sale are recorded.

A job is a special order for a custom product. A job lot consists of a quantity of identical, special-order items.

true

false

false

Perpetual record updated each time units are purchased or issued for production use

Source document production managers use to request materials for production; used to assign materials costs to specific jobs or overhead

Source document used to record the number of hours an employee works and to determine the total labor cost for each pay period.

Source document used to report the time an employee spent working on a job or on overhead activities and then to determine the amount of direct labor to charge to the job or the amount of indirect labor to charge to overhead

Rate established prior to the beginning of a period that relates estimated overhead to another variable, such as estimated direct labor, and is used to assign overhead cost to production

estimated overhead costs divided by estimated activity base

Goods in Process Inventory if for a job

Four sources of factory overhead are materials requisitions, time tickets, vouchers, and adjusting entries.

Since a job order cost accounting system uses perpetual inventory records, overhead costs must be assigned to jobs before the end of a period. This requires the use of a predetermined overhead rate.

Debits are recorded when wages and salaries of factory employees are paid or accrued.

Credits are recorded when direct labor costs are assigned to jobs and when indirect labor costs are transferred to the Factory Overhead account.

Amount by which overhead incurred in a period exceeds the overhead applied to that period's production using the predetermined overhead rate.

Amount by which the overhead applied to production in a period using the predetermined overhead rate exceeds the actual overhead incurred in a period.

overstated

Overapplied or underapplied overhead usually exists at the end of a period because application of overhead is based on estimates of overhead and another variable such as direct labor. Estimates rarely equal actual amounts incurred.

A debit balance reflects underapplied factory overhead.

Job

Customized manufacturing

Job order costing

Job cost sheet.

Direct material, direct labor, overhead.

$25,000

Predetermined overhead allocation rate.

Underapplied.

wedding invitations

1-predict costs to complete job 2-negotiate price to determine whether to take job 3-schedule production of the job

perpetual inventory system

job order costing

job cost sheet

direct materials, direct labor, and overhead

materials ledger card

debit-goods in process and overhead credit-raw materials

debit-goods in process inventory and overhead credit-factory payroll

debit-goods in process inventory credit-factory overhead

beginning GIP plus DC minus ending GP

estimated overhead divided by activity base

20,000 times 1.25 equals 25,000 is predetermined overhead rate

Debit-COGS credit-Factory Overhead

Credit-FOH Debit-COGS

overhead underapplied

DL plus DM plus FOH

beginning RM plus purchases minus ending RM

Beginning GIP plus total manufacturing cost minus ending GIP

beginning FG plus COGM minus ending FG