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Bus 254 chapter 3 notes.doc

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Business Administration
BUS 254

Absorption Costing full costAll manufacturing costs direct material direct labour and both vairable and fixed overhead are included as part of the cost of a finished unit of productProcess Costing systemused when company produces many units of a single product for a long period of timeoHomogeneous oUnit CostTotal manufacturing costtotal unit producedJobOrder Costing Systemused when company produces different products each periodoUnit CostTotal cost of each jobnumber of units produced in that jobMeasuring Direct Material CostBill of Materialsdocument that lists the type and quantity of each item of material needed to complete a unit of productoThe issuing of a Product Order is then occurredMaterial Requisition Formdetailed source document that oSpecifies type and quantity of materials neededoIdentifies the job to which the cost of the materials are to be chargedJob cost sheetform prepared to each separate job that records materials labour and overhead costs charged to the joboUnder Direct Material it shows Req No andAmountoUsed just as materials are issuedMeasuring Direct Labour CostTime TicketA detailed source document that is used to record an employees hourbyhour activities during the dayoIncludes start and end time rate of pay total amount and job numberoData added to job cost sheetDirect labour under job cost sheet contains ticket hours and amountApplication of Manufacturing OverheadHarder to do becauseoIt is an indirect cost hard to traced to particular joboConsist of many different itemsoRemains relatively constant due to the presence of fixed costsAllocation Basemeasure of activity such as direct labourhours or machinehours that is used to assign costs to cost objectsoUsed to compute the Predetermined Overhead RatePOREstimated total manufacturing overhead costEstimated total units in allocation baseOverhead Applicationprocess of charging manufacturing overhead cost to job cost sheets and to the Work in Process accountOverehead appliedPOR X Amount of allocation base incurred actual
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