Term
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Definition
| assigning direct cost(s) to cost object(s) |
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Term
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Definition
| assigning indirect cost(s) to cost object(s) |
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Term
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Definition
| any logical grouping of related cost objects |
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Term
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Definition
| a systematic way to link indirect cost(s) to cost object(s) |
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Term
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Definition
Cost object is a unit of a distinct product of service (ie. a "job")
Each "job" may be different from the next |
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Term
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Definition
| Cost object is MANY units of identical or similar products/services |
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Term
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Definition
= Total production cost
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Total # of Products produced |
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Term
| Job Costing Evaluation (5 Steps) |
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Definition
1. Identify problems and uncertanties
2. Obtain information
3. Make predictions about the future
4. Make decisions by choosing between alternatives
5. Implement decision, evaluate performance and learn. |
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Term
| Normal Costing (7 Step Method) |
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Definition
1. Identify the job (the cost object)
2. Identify the direct costs of the cost object
3. Select the cost-allocation base(s) to use for allocating indirect costs to the cost object
4. Identify and add all indirect costs into one indirect cost pool
5. Compute the indirect cost allocation rate
6. Compute the indirect cost allocated to the cost object
7. Compute the total cost of the distinct job by adding all direct and indirect costs assigned to this job. |
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Term
| Three methods for Adjusting Over/Under applied Overhead |
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Definition
1. Adjusted Allocation Rate Approach
2. Proration Approach
3. Write-off Approach |
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Term
| Adjusted Allocation Rate Approach |
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Definition
- A way of adjusting over or under applied overhead
- All allocations are recalculated with the actual, exact allocation rate |
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Term
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Definition
- A way of adjusting over or under applied overhead
- Difference is allocated between COGS, Work-in-progress and Finished Goods based on their sizes. |
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Term
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Definition
- A way of adjusting over or under applied overhead
- Difference is written off as COGS |
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