Garrison, Chapter 2, Managerial Accounting Questions and Answers with complete solution

Absorption Costing - ️️A costing method that includes all manufacturing costs: direct costs, direct labor, and both variable and fixed manufacturing costs. Overapplied Overhead - ️️A credit balance in the Manufacturing Overhead account that occurs when the amount of overhead cost applied to WIP exceeds the amount actually incurred during a period. Predetermined overhead rate - ️️A rate used to charge manufacturing overhead costs to jobs that is established in advance fo reach period. It is computed by dividing the estimated total manufacturing cost for the period by the estimated total amount of allocation base. Allocation Base - ️️A measure of activity such as direct labor-hours or machine hours that is used to assign costs to cost objects. Bill of Materials - ️️A document that shows the quantity of each type of direct material required to make a product Cost driver - ️️A factor, such as machine hours, beds occupied, etc that causes overhead costs Job Cost Sheet - ️️A form that records the direct materials, direct labor, and MOH charged to a job. Job 0rder costing - ️️A costing system used in situations where many different products, jobs, or services are produced each period. Materials requisition form - ️️A document that specifies the type and quantity of materials to be drawn from the storeroom and that identifies the job that wil be charged for the cost of those materials Multiple predetermined overhead rates - ️️A costing system wih multiple overhead cost pools and a different overhead rate for each cost pool. Eah production department may be treated as a separate overhead cost pol. Overapplied - ️️Normal Cost System - ️️A costing system in which overhead rates are applied to a job by multiplying a predetermined overhead rate by teh actual amount of the allocation based incurred by the job. Schedule of Cost of Goods Sold - ️️A schedule that contains three elements of product costs-direct materials, direct labor, MOH, and that summarizes the portion of those costs that remain in ending finished goods inventory and that are transferred out of finished goods into Costs of Good Sold.