Cost Accounting Flashcards
6 cards from real Accounting Online Program practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Cost Accounting flashcards as text
Which costing method is most appropriate for mass-production environments where identical units are manufactured continuously?
Answer: Process costing
Process costing is used in mass-production industries (e.g., chemicals, oil refining) where homogeneous units are produced continuously and costs are averaged over all units.
What are 'equivalent units of production' used for in process costing?
Answer: Converting partially completed units into a whole-unit equivalent for cost averaging
Equivalent units convert partially completed work-in-process inventory into a whole-unit equivalent so that costs can be fairly averaged across all production activity.
Which of the following is classified as a period cost?
Answer: Selling and administrative expenses
Period costs, such as selling and administrative expenses, are expensed in the period incurred and do not flow through inventory accounts.
In job-order costing, which document accumulates all costs assigned to a specific job?
Answer: Job cost sheet
A job cost sheet records direct materials, direct labor, and applied overhead for each unique job, serving as the subsidiary ledger for work-in-process inventory.
Overapplied overhead occurs when:
Answer: Applied overhead exceeds actual overhead costs incurred
Overapplied overhead means more overhead was assigned to products (using the predetermined rate) than was actually incurred, requiring an adjustment.
The predetermined overhead rate is calculated as:
Answer: Estimated overhead costs ÷ estimated activity level
The predetermined overhead rate is calculated before the period begins using estimated overhead costs and an estimated activity base (e.g., direct labor hours or machine hours).