Accounting 203 Chapter 3

A bill of materials is a document that lists the type and quantity of each type of direct material needed to complete a unit of product.

is a document that specifies the type and quantity of materials to be drawn from the storeroom and identifies the job that will be charged for the cost of the materials

records the materials, labor, and manufacturing overhead costs charged to that job

is an hour-by-hour summary of the employee’s activities throughout the day

is a measure such as direct labor-hours (DLH) or machine-hours (MH) that is used to assign overhead costs to products and services.

Is computed by dividing the total estimated manufacturing overhead cost for the period by the estimated total amount of the allocation base

The process of assigning overhead cost to jobs.

applies overhead to jobs by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the jobs.

A cost driver is a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.

Raw materials include any materials that go into the final product. When raw materials are used in production, their costs are transferred to the Work in Process inventory account as direct materials.

Work in process consists of units of product that are only partially complete and will require further work before they are ready for sale to the customer.

Finished goods consist of completed units of product that have not yet been sold to customers.

The cost of goods manufactured includes the manufacturing costs associated with the goods that were finished during the period.

is used in situations where many different products, each with individual and unique features, are produced each period.

In a job-order costing system, costs are traced and allocated to jobs and then the costs of the job are divided by the number of units in the job to arrive at an average cost per unit.