Deck 27: Job Order Cost Accounting

Question 1

The manufacturing overhead recorded in the Work in Process Inventory account is not necessarily the actual overhead incurred.

Answer 1

True

Question 2

Perpetual inventory records are maintained through the use of subsidiary ledger cards or their automated equivalents.

Answer 2

True

Question 3

There may not be a raw materials inventory account when a just-in-time inventory system is used.

Answer 3

True

Question 4

The entry to charge work in process inventory with the appropriate amount of applied overhead consists of a debit to Work in Process Inventory and a credit to Manufacturing Overhead Applied.

Question 5

Indirect materials issued to production are recorded with a debit to Work in Process and a credit to Raw Materials.

Question 6

The monthly total of the Overhead Applied section of all job order cost sheets should agree with the balance in the control account Manufacturing Overhead.

Question 7

The cost of a unit produced in a process cost system is the sum of the costs incurred in each department divided by the number of output units.

Question 8

There is no need to take a physical count of inventory periodically when the perpetual inventory system is used.

Question 9

The process cost accounting system is used when homogenous products are manufactured in a continuous process.

Question 10

Under the LIFO method of inventory pricing,the quantities issued are priced from the oldest inventory items available in the order they were received.

Question 11

At the end of each year,the underapplied or overapplied overhead is closed to the Work in Process inventory account.

Question 12

When perpetual inventories are maintained in a job order cost system,as each job is completed its cost is transferred from Work in Process Inventory to Finished Goods Inventory.

Question 13

At the end of each year,the underapplied or overapplied overhead usually is closed out to the Cost of Goods Sold account.

Question 14

Utilizing standard costing systems enables management to evaluate manufacturing efficiencies.

Question 15

At the end of each year,the underapplied or overapplied overhead appears as an adjustment to the Cost of Goods Sold amount on the Income Statement.

Question 16

When a perpetual inventory system is used,the balance of the Raw Materials Inventory account at the end of an accounting period should reflect the cost of materials on hand.

Question 17

The manufacturing overhead recorded in the Work in Process Inventory account is often the same as the actual overhead incurred.

Question 18

Purchases of raw materials are debited to the Work in Process Inventory account.

Question 19

Direct labor costs of $10,000 and indirect labor costs of $1,500 associated with a job are recorded on the job cost sheet with a corresponding debit to Work in Process for $11,500.

Question 20

Standard cost accounting may be used with either a job order cost system or a process cost system.

Question 21

If a firm estimates that for the coming year it will have expected total direct labor costs of $60,000 and total manufacturing overhead costs of $36,000,its overhead application rate will be 60 percent.

Question 22

A worker completes a(n)____________________ for each job indicating the job performed and the corresponding starting and stopping time.

Question 23

Under a perpetual inventory system,when goods are sold the Cost of Goods Sold account is ___________________.

Question 24

Idle time is generally charged to manufacturing overhead.

Question 25

The _________________________ rate is often computed by dividing estimated overhead costs by estimated direct labor costs.

Question 26

Under a perpetual inventory system,when goods are completed the Work in Process Inventory account is ___________________.

Question 27

A(n)____________________ cost accounting system permits a firm to compare what its costs should be with its actual costs in order to evaluate efficiency.

Question 28

Manufacturing costs for each unit produced is calculated by dividing job order costs by ___________________.

Question 29

If actual overhead costs exceed the overhead applied during the year,the difference represents ____________________ overhead.

Question 30

In a perpetual inventory system,each inventory account is supported by a(n)____________________ ledger.

Question 31

Under a job order cost system,unit costs are determined for products manufactured under each ___________________.

Question 32

A(n)____________________ cost accounting system is normally used when standard types of products are made in continuous operations.

Question 33

The entry to record applied overhead includes a(n)____________________ to the Work in Process Inventory account.

Question 34

Acceptable methods for determining cost of inventory include FIFO,LIFO,weighted average cost,specific identification and standard cost.

Question 35

Indirect labor is recorded by debiting the _________________________ account.

Question 36

In a just-in-time inventory system,the _________________________ account is debited when goods arrive.

Question 37

____________________ and ___________________ are the two principal cost accounting systems for capturing and reporting manufacturing costs.

Question 38

When a cost accounting system is used,perpetual inventory records are kept for raw materials,work in process,and ___________________.

Question 39

At the end of the month,if the total of the credits in the Manufacturing Overhead Applied account is greater than the total of the debits in the Manufacturing Overhead account,overhead has been underapplied.

Question 40

The entry to record applied overhead includes a(n)____________________ to Manufacturing Overhead Applied.

Question 41

The advantages of a just-in-time inventory system include all of the following except:

A) reduction in storage and warehousing cost.
B) cost associated with stock outs.
C) reduction in working capital requirements.
D) reduction in costs associated with recordkeeping.

Question 42

Materials may be withdrawn from the storeroom only on completion of a materials ___________________.

Question 43

At the end of the fiscal year,any immaterial overapplied or underapplied overhead is

A) closed to the Cost of Goods Sold account.
B) shown on the balance sheet as either a deferred charge or a deferred credit.
C) allocated to Cost of Goods Sold,Finished Goods Inventory,and Work in Process Inventory.
D) closed to the Cost of Goods Manufactured account.

Question 44

Job order cost accounting is appropriate

A) when there are continuous operations on standard types of products.
B) when a company produces more than one product in batches rather than on a continuous basis.
C) only for goods produced on special order.
D) for all manufacturing companies.

Question 45

Actual labor and manufacturing overhead costs for Smith Manufacturing were $65,000 and $123,500 respectively.The estimated costs for the year were $75,000 labor and $150,000.The over (under)applied overhead for the year was:

A) $6,500 underapplied.
B) $6,500 overapplied.
C) $26,500 underapplied.
D) $26,500 overapplied.

Question 46

Jacson Corp.was undecided whether to use labor hours or labor cost in establishing the annual overhead rate.Labor costs are prone to fluctuate based on new hires,raises,retirements,and personnel leaving.They decided to compute both rates.The overhead costs for the year were estimated at $525,000 with expected direct labor hours of 35,000 and indirect hours of 15,000.Direct and indirect labor costs are estimated to be $420,000 and $210,000 respectively.The overhead application rate using either base (labor hours,labor cost)would be:

A) $15 per hour;125% of labor cost.
B) $10.50 per hour;83.3% of labor cost.
C) $12 per hour;80% of labor cost.
D) $12.60 per hour;120% of labor cost.

Question 47

At the end of the accounting period,the balance in the Raw Materials inventory account reflects the cost of materials

A) assigned to manufacturing overhead.
B) issued to production.
C) purchased during the period.
D) on hand and available for use.

Question 48

Workers who perform direct labor prepare a series of ____________________ to account for all time spent in the plant.

Question 49

When materials that will become part of a finished product are removed from the storeroom and placed in production,

A) Work in Process Inventory is debited.
B) Manufacturing Overhead is debited.
C) Raw Materials Inventory is debited.
D) Work in Process Inventory is credited.

Question 50

The entry to record the application of overhead to jobs consists of

A) a debit to Manufacturing Overhead Applied and a credit to Manufacturing Overhead.
B) a debit to Manufacturing Overhead and a credit to Manufacturing Overhead Applied.
C) a debit to Work in Process Inventory and a credit to Manufacturing Overhead Applied.
D) a debit to Manufacturing Overhead Applied and a credit to Work in Process Inventory.

Question 51

A standard cost system may be used

A) only with a process cost system.
B) only with a job order cost system.
C) with either a job order cost system or a process cost system.
D) in neither a job order cost system or a process cost system.

Question 52

A job order cost sheet summarizes

A) the direct labor,direct materials used,and actual overhead costs incurred on a specific job.
B) the direct labor,direct materials used,and applied overhead association with a specific job.
C) the estimated costs that will be required to complete a specific job.
D) the direct labor and direct materials used only.

Question 53

When perpetual inventories are maintained in a job order cost system,the balance of the Work in Process Inventory account represents

A) the actual costs incurred for labor,materials,and overhead on all jobs that were started but are not yet complete.
B) the actual costs for the labor and materials used in uncompleted jobs and estimate of the overhead associated with these jobs.
C) only the actual costs for the labor and materials used in uncompleted jobs.
D) only the actual costs for the labor and materials used in completed jobs.

Question 54

At the end of the accounting period,the balance in the Work in Process inventory account reflects the cost

A) of goods manufactured.
B) of completed units.
C) of partially completed units.
D) of goods sold.

Question 55

When indirect materials are requisitioned from the materials storeroom and placed in production,an entry is made crediting Raw Materials Inventory and debiting

A) Work in Process Inventory.
B) Cost of Goods Manufactured.
C) Manufacturing Overhead Applied.
D) Manufacturing Overhead.

Question 56

Actual overhead costs are

A) debited to Work in Process Inventory when incurred.
B) debited to Manufacturing Overhead when incurred.
C) debited to Manufacturing Overhead Applied when incurred.
D) credited to Manufacturing Overhead when incurred.

Question 57

A firm purchased 25 units of materials with a unit price of $2.00 on May 5.On May 15,the firm purchased 25 units with a unit price of $2.10.If the firm uses the FIFO method of inventory pricing,the total cost of 30 units issued on May 20 would be

A) $62.50.
B) $60.00.
C) $63.00.
D) $60.50.

Question 58

The following are benefits of a standard cost system except:

A) consistently costed products.
B) assists in identification of manufacturing inefficiencies.
C) will result in reducing accounting workload.
D) can be used as a basis for setting selling prices.

Question 59

When a perpetual inventory system is used,sales revenue is recorded as products are sold,

A) but the cost of the goods sold is not recorded.
B) and the cost of the goods sold is transferred from the Finished Goods Inventory account to the Cost of Goods Sold account.
C) and the cost of the goods sold is transferred from the Work in Process Inventory account to the Cost of Goods Sold account.
D) and the cost of goods sold is transferred from the Cost of Goods Manufactured to the Cost of Goods Sold account.

Question 60

A job order cost sheet would be utilized to track the cost of the following costs except for:

A) sales commission on the job.
B) material issued to the job.
C) labor hours worked.
D) overhead allocated.

Question 61

The ______ is a record of all manufacturing costs charged to a specific job.

A) Cost of Goods Sold
B) Standard Costs Card
C) Work in Process Inventory
D) Job Order Cost Sheet

Question 62

Job Z2 requires $1,200 of material,$100 of which is indirect material.If manufacturing overhead is applied at a rate of 150 % of direct labor cost and labor hours charged to Job Z2 were 200 hours at $12 an hour,the total cost of Job Z2 would be:

A) $3,600.
B) $4,800.
C) $7,200.
D) $7,100.

Question 63

A raw material subsidiary ledger

A) contains a raw materials card for each item of direct materials only.
B) contains a raw materials card for each item of indirect materials only.
C) contains a raw materials card for each item of direct materials and indirect materials.
D) contains a raw material card for each supplier of raw materials.

Question 64

Manufacturing overhead includes all of the following except

A) indirect labor.
B) direct labor.
C) utilities.
D) payroll taxes on factory labor.

Question 65

If manufacturing overhead is applied at a rate of $1.50 per direct labor dollar and the Department B worker had worked 200 hours at $12 an hour on Job L1147,then the applied overhead would be

A) $3,600.
B) $18.
C) $300.
D) $2,400.

Question 66

A firm purchased 25 units of materials with a unit price of $2.00 on May 5.On May 15,the firm purchased 25 units with a unit price of $2.10.If the firm uses the LIFO method of inventory pricing,the total cost of 30 units issued on May 20 would be

A) $62.50.
B) $60.00.
C) $63.00.
D) $60.50.

Question 67

If the manufacturing overhead was overapplied,then the

A) the manufacturing overhead account had more debits than credits.
B) the manufacturing overhead account had more credits than debits.
C) the actual overhead expenses were more than the amount going to Work in Process.
D) the debits to Work in Process were more than the credits to Work in Process.

Question 68

At the end of the year the Manufacturing Overhead account is closed into what account?

A) Work in Process
B) Finished Goods
C) Cost of Goods Sold
D) Manufacturing Overhead Control

Question 69

What is the subsidiary ledger that contains a record for each overhead item called?

A) Manufacturing Overhead Control
B) Manufacturing Overhead Ledger
C) Manufacturing Overhead Records Book
D) Manufacturing Overhead Card

Question 70

A firm purchased 50 units of materials with a unit price of $1.30 on June 1.On June 15,the firm purchased 50 units with a unit price of $1.20.If the firm uses the LIFO method of inventory pricing,the total cost of 65 units issued on June 20 would be

A) $83.00.
B) $79.50.
C) $78.00.
D) $84.50.

Question 71

Martinez Manufacturing applies overhead based on direct labor hours.The company estimates that their overhead for the year will be $180,000,and that they will use 72,000 direct labor hours.During the year,Martinez Manufacturing actually used 75,000 direct labor hours and actual overhead costs were $190,000.At the end of the year,manufacturing overhead was:

A) Overapplied by $2,500.
B) Overapplied by $10,000.
C) Underapplied by $2,500.
D) Underapplied by $10,000.

Question 72

Wilson Enterprises applies overhead based on direct labor cost.The company estimates that their overhead for the year will be $240,000,and direct labor cost to be $300,000.Actual direct labor cost for Martinez Manufacturing was $280,000 and actual overhead costs were $220,000.At the end of the year,manufacturing overhead was:

A) Overapplied by $20,000.
B) Underapplied by $20,000.
C) Overapplied by $4,000.
D) Underapplied by $4,000.

Question 73

Process cost accounting is appropriate

A) exclusively for companies that produce only one product.
B) when a company produces more than one product in batches rather than on a continuous basis.
C) when a company produces what each customer wants on special order.
D) when there are continuous operations on standard types of products.

Question 74

Finished Goods beginning and ending balances are $18,000 and $14,000.The cost of goods manufactured for the period was $145,000.Actual manufacturing overhead for the period was $32,000 and applied overhead was $35,000.The adjusted cost of goods sold was:

A) $152,000.
B) $149,000.
C) $146,000.
D) $144,000.

Question 75

Martinez Manufacturing applies overhead based on direct labor hours.The company estimates that their overhead for the year will be $180,000,and that they will use 72,000 direct labor hours.Martinez Manufacturing actually used 75,000 direct labor hours.The journal entry to record manufacturing overhead would include a:

A) Debit to Work in Process Inventory for $187,500.
B) Credit to Manufacturing Overhead Applied for $180,000.
C) Debit to Work in Process Inventory for $180,000.
D) Debit to Manufacturing Overhead Applied for $187,500.

Question 76

The McGreen Company employees worked 10,000 hours last year with an average hourly rate of $11 per hour.The overhead was $495,000.If overhead is based on direct labor costs,then the overhead rate is ________ per direct labor dollar.

A) $11.00
B) $49.50
C) $4.50
D) $4.95

Question 77

The total direct labor charged to all job cost sheets must agree with the direct labor debited to

A) Time Tickets.
B) Wages Payable.
C) Work in Process Inventory.
D) Wages Expense.

Question 78

Wilson Enterprises applies overhead based on direct labor cost.The company estimates that their overhead for the year will be $240,000,and direct labor cost to be $300,000.Actual direct labor cost for Martinez Manufacturing was $280,000.The journal entry to record manufacturing overhead would include a:

A) Debit to Work in Process Inventory for $240,000.
B) Credit to Manufacturing Overhead Applied for $350,000.
C) Credit to Work in Process Inventory for $224,000.
D) Credit to Manufacturing Overhead Applied for $224,000.

Question 79

Job order cost sheets constitute a subsidiary ledger that supports

A) the Work in Process Inventory account.
B) the Finished Goods Inventory account.
C) the Raw Materials Inventory account.
D) the Cost of Goods Manufactured account.

Question 80

A firm purchased 50 units of materials with a unit price of $1.30 on June 1.On June 15,the firm purchased 50 units with a unit price of $1.20.If the firm uses the FIFO method of inventory pricing,the total cost of 65 units issued on June 20 would be

A) $83.00.
B) $79.50.
C) $78.00.
D) $84.50.