ACC 132 Lecture 4 Outline of Last Lecture I. Manufacturing CostsII. Nonmanufacturing CostsIII. Product CostsIV. Prime and Conversion CostsV. Variable CostsVI. High-Low MethodA. EquationVII. Tradition Format Income StatementA. Costs of goods soldOutline of Current Lecture I. Job Order CostingII. Measuring Direct Materialsa) Bill of Materialsb) Materials Requisition FormIII. Job Cost SheetIV. Predetermined Overhead Ratea) Allocation Baseb) Predetermined Overhead RateV. Applying Manufacturing Overheada) Cost Driverb) Raw Materialsc) Work in ProcessCurrent LectureJob Order costing: used in situations where many different products, with individual and uniquefeatures are produced each periodThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Measuring Direct MaterialsBill of Materials: document that lists the type and quantity of each type of direct material needed to complete a unitMaterials requisition form: document that specifies the type and quantity of materials to be drawn from the storeroom and identifies the job that will be chargedJob Cost Sheet: records materials, labor and manufacturing overhead costs charged to that jobMeasuring Direct Labor CostsTime Ticket: is an hour by hour summary of the employees activities throughout the dayPredetermined Overhead RateAllocation base: is a measure such as direct labor hours that is used to assigns overhead costs to products and servicesPredetermined Overhead RatePOHR = estimated total manufacturing overhead costsEstimated total amount of the allocation base*used before the period begins*Sales OrderMaterials RequisitionDirect Labor Time TicketPredetermined Overhead RateProduction OrderY = a + bXY = estimated total manufacturing overhead costa = fixed total MOH costb = variable MOH cost per unit of allocation baseX = estimated total amount allocated baseApplying Manufacturing OverheadOverhead applied to a particular job = Predetermined OH Rate X Amount of the allocation base incurred by the jobCost Driver: a factor (machine hours) that causes overhead costRaw Materials: include any materials that go into final product *when used in production costs are transferred to Work in ProgressWork in process: consists of units of product that are only partially complete and requires further work before they are ready for