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Cards In This Set
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Uses linear algebra and global consumption ratios without sacrificaing accuracy
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Equally Accurate Simplification
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Uses the most expensive activities, the inexpensive activities are allocated to the expensive ones proportionally
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Approx. relevant simplification
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Simplifying costs after-the-fact
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1. Approx. relevant
2. Equally accurate
(TDABC)
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Added to cost of job (No Journal entry)
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Abnormal spoilage
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High/low method is defined by
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Output
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Don't add to cost of job
OH Control XX
Materials XX
Payroll XX
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Normal spoilage
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A hybrid of job order costing and process costing
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Operation costing
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Unique. custom batches, can be used by both service and manufacturing firms
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Job Order Costing
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Services differ from products in 4 ways:
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1. intangibility
2. inseparability
3. heterogeneity
4. perishability
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An activity that is consumed by a final cost object such as a product or customer
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Primary activity
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Candidates for ABC include:
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1. Plants with multiple products
2. High product diversity
3. Significant non-unit level overhead
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Products consume overhead activites in different proportions
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Product Diversity
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Journal entry for overapplied overhead when material
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OH Control XX
WIP XX
FG XX
COGS XX
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Journal entry for overapplied overhead when inmaterial
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OH Control XX
COGS XX
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Actual Overhead < Applied Overhead
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Overapplied overhead
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