ACC 406 Chapter 5: Chapter 5
Document Summary
this is called a process-costing system y comparison of job-order & process costing on exhibit 5-1 on pg 182. In a job-order firm, collecting costs by job provides vital information for management. Normal costing and overhead application y unit costs r very important cuz managers need accurate cost information on materials, labour & overhead when making decisions. overhead can be estimated by approximating the year s actual overhead at the beg. of the year & then using a predetermined rate throughout the year to obtain the needed unit cost info. almost all firms use normal costing (exhibit 5-2 on pg 184) Importance of unit costs to manufacturing firms y unit costs r important for valuing inventory, determining income & making a # of important decisions y. applied overhead = overhead rate x actual use of the associated activity for the period.