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19 Cards in this Set
- Front
- Back
Factory overhead costs that vary in direct proportion to the level of production . |
Variable factory overhead cost |
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Remain constant within the relevant range regardless of the varying levels of production |
Fixed factory overhead cost |
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Management's operating plans expressed in quantitative terms |
Budget |
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Neither wholly fixed nor wholly variable in nature but has characteristics of both |
Mixed factory overhead costs |
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Most commonly used base or denominator in the computation of the predetermined factory overhead rate |
Direct labor hours |
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Most simple method to use because units produced are readily available |
Units of production |
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Used when either a single product is being manufactured or when the different product being manufactured passes through the same series of productive departments |
Single plantwide factory application rate |
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Preferable with the different products being manufactured either do not pass through the same series a productive departments or have the similar amounts of applied factory overhead |
Multiple departmental factory overhead application rates |
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Ignores any service rendered by one service department to another |
Direct method |
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Sequential method of allocation . Recognize the services rendered by service departments to other service departments and is more complicated because it requires a sequence of allocation |
Step method |
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Reciprocal method . Allocates costs by explicitly include in the mutual services rendered among all departments |
Algebraic method |
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Capacity to produce at full speed without interruptions |
Theoretical , maximum or ideal capacity |
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Capacity of production that provides allowance for circumstances that may result to stoppage of production |
Practical capacity |
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Capacity concept based on a short range outlook which is feasible only for firms whose products are seasonal |
Expected actual capacity |
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Capacity of production taking into consideration the utilization of the plant facilities to meet commercial demands |
Normal capacity |
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Account for each kind of overhead expense according to their nature is opened in the ledger |
Non controlling account system |
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Overhead control account is opened in the general red river in the overhead incurred are charged in the subsidiary ledger is maintained to show in detail the nature and account of the expense |
Controlling account system |
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The variance due to expense factors |
Spending variance |
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The variance due to the difference in volume and activity factors |
Idle capacity or volume variance |