Deck 16: Job Order Costing

Question 1

Each account in the work in process subsidiary ledger in a job order costing system is called a job cost sheet.

Answer 1

True

Question 2

A job order cost system would be appropriate for a crude oil refining business.

Answer 2

False

Question 3

Perpetual inventory controlling accounts and subsidiary ledgers are maintained for materials, work in process, and finished goods in job order costing systems.

Answer 3

True

Question 4

A process cost accounting system provides product costs for each of the departments or processes within the factory.

Question 5

Depreciation expense on factory equipment is part of factory overhead cost.

Question 6

When the goods are sold, their costs are transferred from Work in Process to Finished Goods.

Question 7

In the job order costing system, the finished goods account is the controlling account for the factory overhead ledger.

Question 8

The process cost system is appropriate where few products are manufactured and each product is made to customers' specifications.

Question 9

Factory overhead is applied to production using a predetermined overhead rate.

Question 10

The materials requisition serves as the source document for debiting the accounts in the materials ledger.

Question 11

The document that serves as the basis for recording direct labor on a job cost sheet is the time ticket.

Question 12

If factory overhead applied exceeds the actual costs, overhead is said to be underapplied.

Question 13

A job order cost accounting system provides for a separate record of the cost of each particular quantity of product that passes through the factory.

Question 14

If factory overhead applied exceeds the actual costs, the factory overhead account will have a credit balance.

Question 15

A process cost accounting system provides for a separate record of the cost of each particular quantity of product that passes through the factory.

Question 16

Materials are transferred from the storeroom to the factory in response to materials requisitions.

Question 17

If the underapplied factory overhead amount is immaterial, it is transferred to Cost of Goods Sold at the end of the fiscal year.

Question 18

The inventory accounts generally maintained by a manufacturing firm are only finished goods and materials.

Question 19

Cost accounting systems measure, record, and report product costs.

Question 20

A process cost accounting system is best used by manufacturers of like units of product that are not distinguishable from each other during a continuous production process.

Question 21

A manufacturing business reports just two types of inventory on its balance sheet: work in process inventory and finished goods inventory.

Question 22

As product costs are incurred in the manufacturing process, they are accounted for as assets and reported on the balance sheet as inventory.

Question 23

The direct labor and overhead costs of providing services to clients are accumulated in a work in process account.

Question 24

A service organization will not use the job order costing method because it has no direct materials.

Question 25

Period costs are costs that are incurred for the production requirements of a certain period.

Question 26

Direct labor cost is an example of a period cost.

Question 27

On the balance sheet for a manufacturing business, the cost of direct materials, direct labor, and factory overhead, which have entered into the manufacturing process but are associated with products that have not been finished, are reported as direct materials inventory.

Question 28

Generally accepted accounting principles require companies to use only one factory overhead rate for product costing.

Question 29

Interim financial statements for a manufacturing business would report overapplied factory overhead as a deferred item on the balance sheet.

Question 30

In a job order cost accounting system for a service business, materials costs are normally included as part of overhead.

Question 31

The debit to Factory Overhead for the cost of indirect materials is obtained from the summary of the materials requisitions.

Question 32

Job order cost accounting systems can be used only for companies that manufacture a product.

Question 33

Indirect materials are any materials needed to make a product that can be directly traced to the product.

Question 34

Activity-based costing is a method of accumulating and allocating costs by department.

Question 35

A receiving report is prepared when purchased materials are first received by the manufacturing department.

Question 36

The current year's advertising costs are normally considered period costs.

Question 37

Nonmanufacturing costs are generally classified into two categories: selling and administrative.

Question 38

The job order costing system is not used by service organizations.

Question 39

Using the job order cost system, service organizations are able to bill customers on a weekly or monthly basis, even when the job has not been completed.

Question 40

A law firm would use a job order cost system to accumulate all of the costs associated with a particular client engagement, such as lawyer time, copying charges, filing fees, and overhead.

Question 41

Which of the following would most likely use a job order costing system?

A)paper mill
B)swimming pool installer
C)company that manufactures chlorine for swimming pools
D)oil refinery

Question 42

Which of the following products would most likely be manufactured using a job order costing system?

A)cell phone
B)highlighter pen
C)graduation invitation
D)recliner

Question 43

Which of the following are the two main types of cost accounting systems for manufacturing operations?

A)process cost and general accounting systems
B)job order cost and process cost systems
C)job order and general accounting systems
D)process cost and replacement cost systems

Question 44

Job order cost systems can be used to compare unit costs of similar jobs to determine if costs are staying within expected ranges.

Question 45

On which of the following would the labor costs for an individual job be recorded?

A)clock cards
B)in-and-out cards
C)time tickets
D)a payroll register

Question 46

Which of the following is a product cost?

A)salary of a sales manager
B)advertising for a particular product
C)drill bits for a drill press used in the plant assembly area
D)salary of the company receptionist

Question 47

Which of the following would be most likely to use process costing?

A)custom furniture manufacturer
B)auto body repair shop
C)law firm
D)lawn fertilizer manufacturer

Question 48

For which of the following businesses would the process cost system be appropriate?

A)custom cabinet maker
B)landscaper
C)paper mill
D)catering firm

Question 49

Thomlin Company forecasts that total overhead for the current year will be $15,000,000 with 300,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. If Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is

A)$1,000,000 overapplied
B)$1,000,000 underapplied
C)$500,000 overapplied
D)$500,000 underapplied

Question 50

For which of the following businesses would the job order cost system be appropriate?

A)canned soup processor
B)oil refinery
C)lumber mill
D)hospital

Question 51

At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to

A)increase by $1,700,000
B)decrease by $1,700,000
C)increase by $3,400,000
D)decrease by $3,400,000

Question 52

Which of the following is the correct flow of manufacturing costs?

A)raw materials, work in process, finished goods, cost of goods sold
B)raw materials, finished goods, cost of goods sold, work in process
C)work in process, finished goods, raw materials, cost of goods sold
D)cost of goods sold, raw materials, work in process, finished goods

Question 53

Job order costing and process costing are

A)pricing systems
B)cost accounting systems
C)cost flow systems
D)inventory tracking systems

Question 54

Job cost sheets can provide information to managers on unit cost trends, the cost impact of continuous improvement in the manufacturing process, the cost impact of materials changes, and the cost impact of direct materials price or direct labor rate changes over time.

Question 55

Which of the following is a period cost?

A)depreciation on factory lunchroom furniture
B)salary of telephone receptionist in the sales office
C)salary of a security guard for the factory parking lot
D)computer chips used by a computer manufacturer

Question 56

Which of the following costs are not included in finished goods inventory?

A)direct labor
B)factory overhead
C)chief financial officer's salary
D)direct materials

Question 57

Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory?

A)job order cost system
B)general cost system
C)replacement cost system
D)process cost system

Question 58

Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. The predetermined overhead rate based on machine hours is

A)$48 per machine hour
B)$62 per machine hour
C)$45 per machine hour
D)$50 per machine hour

Question 59

Which of the following is not a characteristic of a job order costing system?

A)It accumulates cost for each department within the factory.
B)It provides a separate record for the cost of each quantity of product that passes through the factory.
C)It is best suited for industries that manufacture custom goods.
D)It uses only one work in process account.

Question 60

Information about costs developed through a job order cost system cannot be used to evaluate an organization's cost performance.

Question 61

Journalizing the entry to record the application of factory overhead costs to jobs would include a credit to

A)Factory Overhead
B)Wages Payable
C)Work in Process
D)Cost of Goods Sold

Question 62

The amount of time spent by an employee on an individual job is recorded on a(n)

A)pay stub
B)in-and-out card
C)time ticket
D)employees' earnings record

Question 63

Selected accounts with amounts omitted are as follows: If the balance of Work in Process on August 31 is $220,000, what was the amount debited to Work in Process for direct materials in August?

A)$390,000
B)$170,000
C)$525,000
D)$580,000

Question 64

A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of the materials from the controlling account in the general ledger to the controlling accounts for

A)Work in Process and Cost of Goods Sold
B)Work in Process and Factory Overhead
C)Finished Goods and Cost of Goods Sold
D)Work in Process and Finished Goods

Question 65

In a job order cost accounting system, the journal entry to record the flow of direct materials into production consists of a

A)debit to Work in Process and a credit to Materials
B)debit to Materials and a credit to Work in Process
C)debit to Factory Overhead and a credit to Materials
D)debit to Work in Process and a credit to Supplies

Question 66

The document authorizing the issuance of materials from the storeroom is a

A)materials requisition
B)purchase requisition
C)receiving report
D)purchase order

Question 67

Journalizing the entry to record the indirect labor costs incurred for general factory use would include a debit to

A)Factory Overhead
B)Wages Payable
C)Wages Expense
D)Cost of Goods Sold

Question 68

Journalizing the entry to record a job completed would include a debit to

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

Question 69

Journalizing the entry to record jobs shipped and customers billed would include a debit to

A)Accounts Payable
B)Cash
C)Finished Goods
D)Cost of Goods Sold

Question 70

In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count the goods, inspect the goods, and complete a

A)purchase order
B)sales invoice
C)receiving report
D)purchase requisition

Question 71

Selected accounts with a credit amount omitted are as follows: What was the balance of Work in Process as of April 30?

A)$8,100
B)$35,000
C)$29,900
D)$22,900

Question 72

The basis for the journal entry recording direct labor for the period is a summary of the

A)job order cost sheets
B)time tickets
C)employees' earnings records
D)clock cards

Question 73

At the end of the fiscal year, the balance in Factory Overhead is small. The balance will be

A)transferred to Work in Process
B)transferred to Cost of Goods Sold
C)transferred to Finished Goods
D)allocated between Work in Process and Finished Goods

Question 74

Journalizing the entry to record a job completed would include a credit to

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

Question 75

If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a

A)debit balance and be underapplied
B)credit balance and be underapplied
C)credit balance and be overapplied
D)debit balance and be overapplied

Question 76

At the end of July, the first month of the current fiscal year, the factory overhead account had a debit balance. Which of the following describes the nature of this balance and how it would be reported on the interim balance sheet?

A)overapplied, deferred credit
B)underapplied, deferred debit
C)underapplied, deferred credit
D)overapplied, deferred debit

Question 77

The source document for the data for debiting Work in Process for direct materials is a

A)purchase order
B)purchase requisition
C)materials requisition
D)receiving report

Question 78

Selected accounts with some amounts omitted are as follows: If the balance of Work in Process on August 31 is $220,000, what was the amount debited to Work in Process for factory overhead in August, assuming a factory overhead rate of 30% of direct labor costs?

A)$135,000
B)$10,000
C)$120,000
D)$70,000

Question 79

In a job order cost accounting system, the journal entry to record the flow of direct labor costs into production consists of a

A)debit to Factory Overhead and a credit to Work in Process
B)debit to Finished Goods and a credit to Wages Payable
C)debit to Work in Process and a credit to Wages Payable
D)debit to Factory Overhead and a credit to Wages Payable

Question 80

Selected accounts with some amounts omitted are as follows: If the balance of Work in Process on October 31 is $21,000, what was the amount of factory overhead applied in October?

A)$63,300
B)$21,300
C)$42,300
D)$11,300