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 o Homogeneous o Unit Cost = Total manufacturing cost / total unit produced Job-Order Costing System = used when company produces different products each period o 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 o The issuing of a Product Order is then occurred Material Requisition Form = detailed source document that o Specifies type and quantity of materials needed o 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 o Under Direct Material, it shows “Req No.” and “Amount” o 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 o Includes start and end time, rate of pay, total amount, and job number o 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: o It is an indirect cost (hard to traced to particular job) o Consist of many different items o Remains relatively constant due to the presence of fixed costs
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Bus 254 chapter 3 notes - Absorption Costing (full cost) =...

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