Management and Organizational Studies 3370A/B Chapter Notes - Chapter 5: Subledger, Barcode, Cost Accounting
Document Summary
Choice of an allocation base for overhead cost: cost driver: a factor that causes overhead costs, such as machine-hours, beds occupied, computer time, or flight hours. In recent years, companies have used activity-based costing principles to redesign their cost accounting systems. It is a costing technique that is designed to more accurately reflect the demands that products, customers, and other cost objects make on overhead resources. Job order costing: the flow of costs: sales order production order direct labour time ticket, materials requisition form, predetermined overhead rates job cost sheet. Manufacturing overhead costs: all costs of operating the factory other than direct materials and direct labour are classified as manufacturing overhead costs, as manufacturing overhead account is debited, the various subsidiary accounts are also debited. Only the applied overhead cost, based on the predetermined overhead rate, appears on the job cost sheet and in the wip account.