Chapter 2 Definitions

Front

A costing method that includes all manufacturing costs--direct materials, direct labor, and both variable and fixed manufacturing overhead--in unit product costs.

Back

Absorption costing

Front

A document that records the amount of time an employee spends on various activities

Back

Time Ticket

Front

The process of assigning overhead cost to specific jobs

Back

Overhead Application

Front

A measure of activity such as direct labor-hours or machine-hours used to assign costs to cost objects

Back

Allocation Base

Front

A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period. It is computed by dividing the estimated total manufacturing overhead cost for the period by the estimated total amount of the allocation base.

Back

Predetermined Overhead Rate

Front

A document showing the quantity of each type of direct material required to make a product

Back

Bill of Materials

Front

A costing system with multiple overhead cost pools and a different predetermined overhead rate for each cost pool, rather than a single predetermined overhead rate for the entire company. Each production department may be treated as a separate overhead cost pool.

Back

Multiple Predetermined Overhead Rates

Front

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

Back

Cost Driver

Front

A single predetermined overhead rate used throughout a plant

Back

Plantwide Overhead Rate

Front

A document specifying the type and quantity of materials to be drawn from the storeroom and the job charged for the cost of those materials

Back

Materials Requisition Form