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16 terms

Chapter 5 Accounting

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Job costing
a costing system that accumulates, tracks, and assigns costs for each job produced by a company
Process costing
a costing system that accumulates and tracks costs for each process performed and then assigns those costs equally to each unit produced
Operations costing
a hybrid of job and process costing; used by companies that make products in batches
Normal spoilage
spoilage resulting from the regular operations of the production process
Abnormal spoilage
spoilage resulting from unusual circumstances, including improper handling, poorly trained employees, faulty equipment, and so on
Fringe benefits
payroll costs in addition to the basic hourly wage
Idle time
worker time that is not used in the production of the finished product
Overtime premium
an additional amount added to the basic hourly wage owing to overtime worked by the workers
Allocation
the process of finding a logical method of assigning overhead costs to the products or services a company produces or provides
Cost drivers
factors that cause, or drive, the incurrence of costs
Cost pools
groups of overhead costs that are similar; used to simplify the task of assigning costs to products using ABC costing
Normal costing
a method of costing using an estimate of overhead and predetermined overhead rates instead of the actual amount of overhead
Predetermined overhead rates
used to apply overhead to products; calculated by dividing the estimated overhead for a cost pool by the estimated units of the cost driver
Overapplied overhead
the amount of applied overhead in excess of actual overhead
Underapplied overhead
the amount of actual overhead in excess of applied overhead
Equivalent units
the number of finished units that can be made from the materials, labor, and overhead included in partially completed units