Deck 5: Product and Service Costing: Job-Order System

Question 1

Manufacturing firms produce intangible products that cannot be inventoried.

Answer 1

False

Question 2

Activity level is the average activity usage over the long term and normal activity level is the production level for one year.

Answer 2

False

Question 3

The source document known as a time ticket assigns the direct overhead to each particular job.

Answer 3

False

Question 4

A production process may yield a tangible product or a service and their unique characteristics determine the best approach for developing a cost management system.

Question 5

The uniqueness of the products or units for cost accounting purposes relates to their common costs.

Question 6

Cost accumulation is the determination of the dollar amounts of direct materials, direct labor and overhead costs, and cost measurement is the recognition and recording of costs.

Question 7

The costs of a completed job are transferred from the work-in-process inventory account to the finished goods inventory account.

Question 8

Cost assignment is the assignment of costs to products or services once the costs have been accumulated and measured.

Question 9

Service firms produce intangible products that are not separable from the customer.

Question 10

Unit cost is a critical piece of information for a manufacturing business as well as a service company.

Question 11

Inseparability means that production and consumption are inseparable for services.

Question 12

The collection of all job-order cost sheets defines a work-in-process inventory file.

Question 13

Companies operating in job-order industries produce a wide variety of products or jobs that are quite different from each other.

Question 14

In a job-order costing system, direct labor costs assigned to a job are different than the costs assigned to work-in-process inventory.

Question 15

A job-order costing process would be applicable for an airplane manufacturer.

Question 16

In a job-order costing system, actual overhead costs never enter the work-in-process inventory accounts

Question 17

Heterogeneity means that services cannot be inventoried and must be consumed when performed.

Question 18

When materials are purchased, the costs of the materials "flows" into the materials inventory account.

Question 19

The job-order cost sheet accumulates the cost of all the jobs produced.

Question 20

Cost flow follows costs from the point they are incurred to the point they are recognized as an expense on the income statement.

Question 21

The __________ activity level is the production level a firm expects to attain for the coming year.

Question 22

Costs of normal spoilage are included in overhead and applied to all good units produced.

Question 23

A debit balance in overhead control implies that actual overhead costs exceed overhead applied.

Question 24

In __________ a single product is produced on a continuous basis.

Question 25

The __________ form indicates the type and quantity of each material issued to the factory.

Question 26

The actual __________ costs are not included on a job-order sheet.

Question 27

The total applied overhead at a given point in time is given by the credit balance in the __________ control account.

Question 28

Determining the dollar amounts of direct materials, direct labor, and overhead used in production involves __________ .

Question 29

__________ means that services cannot be inventoried but must be consumed when performed.

Question 30

A __________ inventory file is a file of job-order cost sheets.

Question 31

In an activity-based costing system activity cost is applied to each job by multiplying productivity rate by the job's use of the associated driver.

Question 32

A __________ service organization does not use raw material or tangible items for the customer.

Question 33

__________ are the source of information for posting the labor cost flows.

Question 34

The association of production costs with the units produced is called __________ .

Question 35

The entry that captures the flow of material from the storeroom to work-in-process is called the __________ inventory account.

Question 36

In job-order costing, departmental overhead rates and activity-based costing affect only the application of overhead.

Question 37

Purchases of direct materials are recorded as a debit to the __________ account.

Question 38

The __________ costing system assigns costs by the job.

Question 39

Abnormal spoilage is charged to the job that caused it.

Question 40

__________ is the recognition and recording of costs.

Question 41

The defective units due to the exacting nature of a particular job is called __________ .

Question 42

Inseparability refers to the

A)nonphysical nature of services as opposed to products.
B)fact that production and consumption are inseparable for services.
C)greater chances for variation in the performance of services than in the production of products.
D)fact that services cannot be inventoried but must be consumed when performed.

Question 43

Which of the following is a pure service?

A)bungee jumping
B)beauty salon
C)restaurant
D)software

Question 44

A pure service organization has

A)no raw materials, no inventories, and a definite separation between the plant and the customer.
B)raw materials, tangible items, and no separation between the plant and the customer.
C)no raw materials, no tangible items, and no separation between the plant and the customer.
D)none of these.

Question 45

Which of the following products would NOT use job-order costing?

A)houses
B)chemicals
C)ships
D)custom-built furniture

Question 46

Manufacturers producing unique or customized products would employ a(n)

A)process costing system.
B)job-costing system.
C)homogeneous costing system.
D)all of the above.

Question 47

Which of the following is a manufactured product?

A)bungee jumping
B)beauty salon
C)automobile
D)restaurant

Question 48

Which of the following would NOT use a process costing system?

A)electrical wire
B)cotton yarn
C)newsprint
D)satellites

Question 49

In job-order costing, departmental overhead rates and activity-based costing affect only the application of __________ .

Question 50

The defective units expected due to the nature of the typical production process are called __________ .

Question 51

Process costing would be most applicable for

A)custom machining.
B)an electronics producer.
C)high rise building construction.
D)CPA audits.

Question 52

Which cost accounting processes would be most appropriate for firms that mass-produce large quantities of similar or homogeneous products?

A)DuPont costing
B)Process costing
C)Job-order costing
D)Common-size costing

Question 53

When a job is completed the total costs are transferred to a __________ inventory file.

Question 54

Which of the following firms would make extensive use of a job-order costing?

A)dental and medical services
B)canned foods
C)discount brokers
D)petroleum

Question 55

The _____ nature of services leads to a requirement of standardized system to handle repeat customers.

A)Heterogenous
B)Intangible
C)Inseparable
D)Perishable

Question 56

When a job is shipped to a customer, the finished job cost becomes the cost of the __________ sold.

Question 57

Homogeneous products refer to

A)products similar in nature.
B)the nonphysical nature of services and opposed to products.
C)great variation in the nature products.
D)products that can be inventoried.

Question 58

Which of the following is true of heterogeneity?

A)It refers to the nonphysical nature of services as opposed to products.
B)It refers to the fact that production and consumption are inseparable for services.
C)Heterogeneity makes it difficult to ensure quality control of services.
D)Heterogeneity makes it difficult for services to be patented.

Question 59

Intangibility refers to the

A)nonphysical nature of services as opposed to products.
B)fact that production and consumption are inseparable for services.
C)greater chances for variation in the performance of services than in the production of products.
D)fact that services cannot be inventoried but must be consumed when performed.

Question 60

Which of the following firms would make extensive use of service costing?

A)Law firm
B)furniture manufacturer
C)auto dealer
D)auto manufacturer

Question 61

Unit cost information is needed for

A)costing inventory.
B)financial reporting requirements.
C)decision making.
D)all of the above.

Question 62

For a manufacturer, the three inventory accounts on the balance sheet are

A)Materials, Finished Goods, and Cost of Goods Sold.
B)Materials, Overhead, and Cost of Goods Sold.
C)Materials, Direct Labor, and Overhead.
D)Materials, Work-in-Process, and Finished Goods.

Question 63

Determining the dollar amounts of direct materials, direct labor, and overhead used in production involves:

A)Job order costing
B)Cost accumulation
C)Cost assignment
D)Cost measurement

Question 64

The principal difficulty with normal costing is that

A)the unit cost information is not received on a timely basis.
B)it can result in fluctuating per-unit overhead costs.
C)estimated overhead and estimated activity are likely to differ from actual overhead and actual costs, resulting in underapplied or overapplied overhead.
D)there is no difficulty associated with using normal costing.

Question 65

An actual overhead rate can be calculated

A)at the beginning of the year.
B)at the end of each month.
C)at the beginning of each month.
D)either at the beginning of the year or at the beginning of the month.

Question 66

Cost accumulation refers to the:

A)use of actual costs for direct materials, direct labor, and overhead to determine unit cost.
B)association of production costs with units produced.
C)recognition and recording of costs.
D)determination of the dollar amounts of direct materials, direct labor, and overhead used in production.

Question 67

Unit cost is important information for which of the following?

A)valuing inventory
B)determining income
C)decision making
D)all of the above

Question 68

In developing unit costs, overhead costs should be assigned using activity drivers. Which would be the likely activity driver for a production process using a lathe?

A)units produced
B)direct labor hours
C)machine hours
D)direct materials cost

Question 69

The process where a single product is produced on a continuous basis is called:

A)process production
B)job-order production
C)job production
D)both a and c

Question 70

The predetermined overhead rate is usually calculated at the

A)end of each month.
B)beginning of each month.
C)beginning of the year.
D)end of the year.

Question 71

A job-order costing system that uses actual costs for direct materials and direct labor and estimated costs for overhead is called a(n) _____.

A)hybrid job-order costing system
B)normal job-order costing system
C)average job-order costing system
D)actual job-order costing system

Question 72

The effect of uniform production levels on unit production costs can be achieved

A)by using a factory overhead rate based on long-run normal production activity level.
B)by using a factory overhead rate based on selling price.
C)by closing the factory overhead at the end of the accounting period.
D)by using a factory overhead rate based on different production levels for each year.

Question 73

A normal costing system records which costs in work in process?

A)actual direct materials, actual direct labor, actual manufacturing overhead
B)applied direct materials, applied direct labor, applied manufacturing overhead
C)applied materials and labor and actual manufacturing overhead
D)actual materials and labor and applied manufacturing overhead

Question 74

Normal costing uses which cost in work in process?

A)applied direct materials
B)actual overhead
C)applied overhead
D)budgeted overhead

Question 75

Which of the following costing systems assigns actual costs of materials to inventory?

A)actual costing system
B)normal costing system
C)standard costing system
D)both a and b

Question 76

Manufacturing overhead consists of all

A)costs other than direct materials.
B)manufacturing costs other than direct materials.
C)costs other than direct materials and direct labor.
D)manufacturing costs other than direct materials and direct labor.

Question 77

Unit costs are critical for

A)valuing inventory.
B)determining net income.
C)decisions to enter a new product line.
D)all of the above.

Question 78

Which of the following costs is usually NOT easily traceable to finished units of product?

A)direct labor
B)direct materials
C)manufacturing overhead
D)all of the above

Question 79

A source document

A)is only an external document.
B)provides transaction data that can be recorded in a database.
C)is only used to record a transaction between an organization and an outside vendor.
D)is only an internal document.

Question 80

The production level the firm expects to attain for the coming year is called:

A)Practical activity level
B)Normal activity level
C)Theoretical activity level
D)Expected activity level