Chapter 4 - Cost Accounting
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9 terms
Terms | Definitions |
|---|---|
 Direct costs and tracing | materials labor |
| Indirect costs and allocation | overhead |
| Cost Pool | logical grouping of related cost objects |
| Job-Costing | system accounting for DISTINCT cost objects called Jobs. Each job may be different from the |
| Process-Costing | system accounting for MASS production of identical or similar products |
| Actual Costing | Indirect costs based on the ACTUAL indirect-cost rates times the actual activity consumption |
| Normal Costing | Indirect costs based on the BUDGETED indirect-cost rates times the actual activity consumption |
| Seven-step Job Costing | 1) Identify Cost Object 2) Identify the Direct Costs 3) Select the Cost-Allocation base to use for allocating Indirect Costs to the Job 4) Match Indirect Costs to Cost-Allocation base 5) Calculate an Overhead Allocation Rate: Actual OH Costs รท Actual OH Allocation Base 6) Allocate Overhead Costs to the Job: OH Allocation Rate x Actual Base Activity For the Job 7) Total Job Costs = adding all direct and indirect costs together |
| Three Methods for Adjusting Over/Underapplied Overhead | 1) Adjusted Allocation Rate Approach 2) Proration Approach between Cost of Goods Sold, Work-in-Process, and Finished Goods based on their relative sizes 3) Write-Off Approach |
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