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BUS 254 chapter 3 notes

BUS 254 chapter 3 notes - Absorption Costing(full cost =...

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Absorption Costing (full cost) = All manufacturing costs (direct material, direct labour, and both vairable and fixed overhead) are included as part of the cost of a finished unit of product Process Costing system = used when company produces many units of a single product for a long period of time Homogeneous Unit Cost = Total manufacturing cost / total unit produced Job-Order Costing System = used when company produces different products each period Unit Cost = Total cost of each job / number of units produced in that job Measuring Direct Material Cost Bill of Materials = document that lists the type and quantity of each item of material needed to complete a unit of product The issuing of a Product Order is then occurred Material Requisition Form = detailed source document that Specifies type and quantity of materials needed Identifies the job to which the cost of the materials are to be charged Job cost sheet = form prepared to each separate job that records materials, labour, and overhead costs charged to the job Under Direct Material, it shows “Req No.” and “Amount” Used just as materials are issued Measuring Direct Labour Cost Time Ticket = A detailed source document that is used to record an employee’s hour-by-hour activities during the day Includes start and end time, rate of pay, total amount, and job number Data added to job cost sheet Direct labour under job cost sheet contains “ticket”, “hours”, and “amount” Application of Manufacturing Overhead Harder to do because: It is an indirect cost (hard to traced to particular job) Consist of many different items
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