Deck 6: Job-Costing Systems

Question 1

Which of the following is a product cost?

A) Direct material costs
B) Selling costs
C) Distribution costs
D) Administrative costs

Answer 1

A

Question 2

Labour time tickets indicate the direct labour time worked by an individual on each job.

Answer 2

True

Question 3

Material requisitions are used for recording

A) materials purchased.
B) materials issued and used in production.
C) materials on hand in the storeroom.
D) none of the above

Answer 3

B

Question 4

The centrepiece of a job-costing system is the

A) materials requisition form.
B) job-cost record.
C) labour time ticket.
D) budgeted overhead rate.

Question 5

Two extremes of product costing are job-order costing and normal costing.

Question 6

The most widely used approach in disposing of an overhead variance is proration.

Question 7

A unique individual product would be better accounted for using a

A) process costing system.
B) period costing system.
C) product costing system.
D) job-order costing system.

Question 8

Which of the following industries is most likely to NOT use a process costing system?

A) Chemicals
B) Plastics
C) Furniture
D) Meat packing

Question 9

Which of the following industries is most likely to NOT use a job-order costing system?

A) Construction
B) Chemicals
C) Aircraft
D) Printing

Question 10

A job-order cost system associates costs with particular jobs.

Question 11

The entry to record the requisition of direct materials would include a debit to WIP Inventory.

Question 12

The work-in-process account will have a balance only if there is unfinished work in the factory.

Question 13

The proration method of disposing of overhead variances prorates the variance among three accounts including Direct-Materials Inventory, WIP Inventory and Finished Goods Inventory.

Question 14

Which of the following statements regarding process costing is FALSE?

A) Process costing deals with great masses of like units.
B) Process costing is an averaging process.
C) In process costing the measure of production is small, whereas in job-order costing the measure of production is large.
D) Process costing is one of the extremes of product costing.

Question 15

Most firms use actual costing because it provides product cost information on a timely basis.

Question 16

A job-order cost system is especially appropriate for situations where basically similar units flow through production on a fairly continuous basis.

Question 17

Materials inventory, work in process, and cost of goods sold would appear in the asset section of the balance sheet.

Question 18

In nonprofit organizations, the product is usually called a program or a class of service.

Question 19

Job-order costing can be used only in manufacturing environments.

Question 20

Product costs appear as cost of goods sold in income statements and as finished-goods inventory values in balance sheets.

Question 21

Witty, Inc. uses a job-order cost system and had the following data available for 20X1.

The ending inventory of finished goods is

A) $58,000.
B) $36,000.
C) $94,000.
D) $292,000.

Question 22

Witty, Inc. uses a job-order cost system and had the following data available for 20X1.

The ending inventory of direct materials is

A) $92,000.
B) $174,000.
C) $82,000.
D) $108,000.

Question 23

The overhead costs of a given period might appear in all of the following EXCEPT

A) materials inventory.
B) work in process.
C) finished goods.
D) cost of goods sold.

Question 24

Witty, Inc. uses a job-order cost system and had the following data available for 20X1.

The journal entry to record the application of the factory overhead would include a

A) debit to Factory Department Overhead Control for $143,000.
B) debit to WIP Inventory for $143,000.
C) credit to Factory Department Overhead Control for $146,000.
D) credit to WIP Inventory for $146,000.

Question 25

A department that is equipment intensive would most likely use a budgeted factory overhead rate based on which of the following cost drivers:

A) machine hours
B) direct labour hours
C) direct labour cost
D) units of direct labour used

Question 26

Witty, Inc. uses a job-order cost system and had the following data available for 20X1.

The journal entry to record the cost of goods completed would include a

A) debit to WIP Inventory for $256,000.
B) credit to Finished Goods Inventory for $292,000.
C) credit to Cost of Goods Sold for $256,000.
D) credit to WIP Inventory for $292,000.

Question 27

Witty, Inc. uses a job-order cost system and had the following data available for 20X1.

The journal entry to record the sale of all jobs would include a

A) debit to Finished Goods Inventory for $292,000.
B) credit to WIP Inventory for $256,000.
C) credit to Finished Goods Inventory for $256,000.
D) credit to Cost of Goods Sold for $292,000.

Question 28

Witty, Inc. uses a job-order cost system and had the following data available for 20X1.

The ending inventory of work in process is

A) $130,000.
B) $127,000.
C) $64,000.
D) $36,000.

Question 29

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

The journal entry to record the sale of all jobs would include a

A) debit to Finished Goods Inventory for $584,000.
B) credit to WIP Inventory for $512,000.
C) credit to Finished Goods Inventory for $512,000.
D) credit to Cost of Goods Sold for $584,000.

Question 30

Use the following information to answer the following item(s).

The budgeted factory overhead rate for applying manufacturing overhead would be

A) $7.62.
B) $8.00.
C) $8.20.
D) $8.61.

Question 31

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

The ending inventory of direct materials is

A) $184,000.
B) $348,000.
C) $164,000.
D) $216,000.

Question 32

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

The journal entry to record the application of the factory overhead would include a

A) debit to Factory Department Overhead Control for $286,000.
B) debit to WIP Inventory for $286,000.
C) credit to Factory Department Overhead Control for $292,000.
D) credit to WIP Inventory for $292,000.

Question 33

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

The journal entry to record the factory overhead costs incurred would include a

A) debit to Factory Department Overhead Control for $292,000.
B) credit to Factory Department Overhead Control for $286,000.
C) debit to WIP Inventory for $292,000.
D) credit to WIP Inventory for $286,000.

Question 34

Witty, Inc. uses a job-order cost system and had the following data available for 20X1.

The journal entry to record the materials placed into production would include a

A) credit to Direct-Materials Inventory for $82,000.
B) debit to Direct-Materials Inventory for $148,000.
C) credit to WIP Inventory for $82,000.
D) debit to WIP Inventory for $148,000.

Question 35

Witty, Inc. uses a job-order cost system and had the following data available for 20X1.

The journal entry to record the factory overhead costs incurred would include a

A) debit to Factory Department Overhead Control for $146,000.
B) credit to Factory Department Overhead Control for $143,000.
C) debit to WIP Inventory for $146,000.
D) credit to WIP Inventory for $143,000.

Question 36

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

The journal entry to record the materials placed into production would include a

A) credit to Direct-Materials Inventory for $164,000.
B) debit to Direct-Materials Inventory for $296,000.
C) credit to WIP Inventory for $164,000.
D) debit to WIP Inventory for $296,000.

Question 37

Use the following information to answer the following item(s).

The amount of the overhead variance would be

A) $24,400 overapplied.
B) $24,400 underapplied.
C) $8,400 overapplied.
D) $8,400 underapplied.

Question 38

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

The journal entry to record the cost of goods completed would include a

A) debit to WIP Inventory for $512,000.
B) credit to Finished Goods Inventory for $584,000.
C) credit to Cost of Goods Sold for $512,000.
D) credit to WIP Inventory for $584,000.

Question 39

Use the following information to answer the following item(s).

If the budgeted factory overhead rate is used to apply overhead, applied manufacturing overhead would be

A) $321,000.
B) $328,000.
C) $336,000.
D) $344,400.

Question 40

Budgeted factory overhead rates are calculated as

A) budgeted total overhead/budgeted total activity.
B) estimated total overhead/actual total activity.
C) actual total overhead/actual total activity.
D) actual total overhead/estimated total activity.

Question 41

As managers seek more accurate product costing, overhead application solely on the basis of direct-labour hours or direct-labour cost is certain to

A) increase in popularity.
B) remain about as popular as it currently is.
C) decrease in popularity.
D) increase or decrease depending upon amounts involved.

Question 42

Harnack Company had the following information:
Budgeted cost driver activity levels:
Actual cost driver activity levels:

The budgeted factory-overhead rate using direct-labour costs as the cost driver is

A) 272 percent.
B) 300 percent.
C) 320 percent.
D) 290 percent.

Question 43

Which of the following is NOT a contributory cause of overhead variances?

A) Poor forecasting
B) Inefficient use of overhead items
C) Calendar variations, number of workdays in a month
D) Operating at the level of volume used as a denominator in calculating the budgeted overhead rate

Question 44

Harnack Company had the following information:
Budgeted cost driver activity levels:
Actual cost driver activity levels:

The budgeted factory-overhead rate using production setups as the cost driver is

A) $31.51.
B) $32.00.
C) $30.00.
D) $33.61.

Question 45

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

To compute the budgeted factory-overhead rate, the budgeted cost driver is divided into the

A) actual factory overhead.
B) budgeted work-in-process.
C) estimated cost of goods sold.
D) budgeted total overhead.

Question 46

Harnack Company had the following information:
Budgeted cost driver activity levels:
Actual cost driver activity levels:

If Job 100 used 838 direct-labour hours, the overhead applied using direct-labour hours as the cost driver should be

A) $11,972.
B) $12,570.
C) $13,408.
D) $12,770.

Question 47

Harnack Company had the following information:
Budgeted cost driver activity levels:
Actual cost driver activity levels:

The following information was gathered for Barton Company for the year ended December 31, 20X1. Assume that direct-labour hours is the cost driver. What is the budgeted factory-overhead rate?

A) $4.63
B) $4.54
C) $4.75
D) $4.84

Question 48

A normal costing system uses the following:

A) actual direct material, actual direct labour, and actual overhead.
B) actual direct material, actual direct labour, and applied overhead.
C) actual direct material, applied direct labour, and actual overhead.
D) applied direct material, applied direct labour, and actual overhead.

Question 49

Harnack Company had the following information:
Budgeted cost driver activity levels:
Actual cost driver activity levels:

If Job 400 used 230 production setups, the overhead applied using production setups as the cost driver should be

A) $6,900.
B) $7,248.
C) $7,360.
D) $7,730.

Question 50

Harnack Company had the following information:
Budgeted cost driver activity levels:
Actual cost driver activity levels:

The budgeted factory-overhead rate using direct-labour hours as the cost driver is

A) $16.00.
B) $14.29.
C) $15.00.
D) $15.24.

Question 51

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

The ending inventory of work in process is

A) $260,000.
B) $254,000.
C) $128,000.
D) $72,000.

Question 52

The following information was gathered for Larsen Company for the year ended December 31, 20X1.

Assume that direct-labour hours is the cost driver. What is the amount of factory overhead applied?

A) $73,625
B) $76,950
C) $71,765
D) $74,990

Question 53

Harnack Company had the following information:
Budgeted cost driver activity levels:
Actual cost driver activity levels:

The budgeted factory-overhead rate using machine hours as the cost driver is

A) $8.00.
B) $8.01.
C) $8.54.
D) $7.50.

Question 54

Harnack Company had the following information:
Budgeted cost driver activity levels:
Actual cost driver activity levels:

If Job 300 used 2,558 machine hours, the overhead applied using machine hours as the cost driver should be

A) $20,490.
B) $20,464.
C) $21,846.
D) $19,185.

Question 55

The following information was gathered for Larsen Company for the year ended December 31, 20X1.

Assume that direct-labour hours is the cost driver. What is the budgeted factory-overhead rate?

A) $4.75
B) $4.63
C) $4.54
D) $4.84

Question 56

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

The ending inventory of finished goods is

A) $160,000.
B) $72,000.
C) $188,000.
D) $584,000.

Question 57

A company that produces less than its planned volume for a year will

A) underapply overhead.
B) not have an overhead variance.
C) overapply overhead.
D) not necessarily over- or underapply overhead.

Question 58

The excess of actual overhead over the overhead applied to products is called

A) overapplied overhead.
B) underapplied overhead.
C) overestimated overhead.
D) prorated overhead.

Question 59

Harnack Company had the following information:
Budgeted cost driver activity levels:
Actual cost driver activity levels:

If Job 200 used $8,736 of direct labour cost, the overhead applied using direct-labour cost as the cost driver should be

A) $26,208.
B) $23,762.
C) $27,956.
D) $25,333.

Question 60

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

To apply the budgeted overhead to a job, the budgeted overhead rate is multiplied by the

A) actual cost-driver data.
B) budgeted cost-driver data.
C) actual factory-overhead costs.
D) estimated factory-overhead costs.

Question 61

If the overhead control account has a credit balance at the end of the period,

A) overhead is overapplied and the difference should be credited to the proper accounts.
B) overhead is overapplied and the difference should be debited to the proper accounts.
C) overhead is underapplied and the difference should be debited to the proper accounts.
D) overhead is underapplied and the difference should be credited to the proper accounts.

Question 62

A rate that is calculated by dividing budgeted overhead by budgeted cost-driver activity.

Question 63

In the immediate write-off approach, underapplied overhead is regarded as

A) a reduction in current income.
B) an addition to the cost of inventory.
C) a decrease in cost of goods sold.
D) a decrease in the cost of inventory.

Question 64

Reed Company incurred actual overhead costs of $640,000 for the year. A budgeted factory-overhead rate of 210 percent of direct-labour cost was determined at the beginning of the year. Budgeted factory overhead was $630,000, and budgeted direct-labour cost was $300,000. Actual direct-labour cost was $320,000 for the year. The factory overhead variance for the year was

A) $10,000 underapplied.
B) $10,000 overapplied.
C) $32,000 underapplied.
D) $32,000 overapplied.

Question 65

Reed Company incurred actual overhead costs of $640,000 for the year. A budgeted factory-overhead rate of 210 percent of direct-labour cost was determined at the beginning of the year. Budgeted factory overhead was $630,000, and budgeted direct-labour cost was $300,000. Actual direct-labour cost was $320,000 for the year. The disposition of the variance, assuming an immaterial amount, would include a

A) debit to Cost of Goods Sold for $32,000.
B) credit to Cost of Goods Sold for $32,000.
C) debit to Cost of Goods Sold for $10,000.
D) credit to Cost of Goods Sold for $10,000.

Question 66

A system that accumulates manufacturing costs by jobs.

Question 67

Fulton Company incurred actual overhead costs of $160,000 for the year. A budgeted factory-overhead rate of 210 percent of direct-labour cost was determined at the beginning of the year. Budgeted factory overhead was $157,500, and budgeted direct-labour cost was $75,000. Actual direct-labour cost was $80,000 for the year. The factory overhead variance for the year was

A) $2,500 underapplied.
B) $2,500 overapplied.
C) $8,000 underapplied.
D) $8,000 overapplied.

Question 68

The proration method of disposing of overhead variances assigns the variance in proportion to the sizes of the ending account balances to

A) WIP and finished goods inventory.
B) cost of goods sold and WIP inventory.
C) direct materials and WIP inventory.
D) cost of goods sold, WIP and finished goods inventory.

Question 69

A difference between actual overhead and applied overhead.

Question 70

In the immediate write-off approach, overapplied overhead is regarded as

A) a decrease in current income.
B) a decrease in cost of goods sold.
C) an addition to the cost of inventory.
D) a reduction to the cost of inventory.

Question 71

Reed Company incurred actual overhead costs of $640,000 for the year. A budgeted factory-overhead rate of 210 percent of direct-labour cost was determined at the beginning of the year. Budgeted factory overhead was $630,000, and budgeted direct-labour cost was $300,000. Actual direct-labour cost was $320,000 for the year. The disposition of the variance, assuming a material amount, would include a

A) debit to Factory Department Overhead Control for $32,000.
B) credit to Factory Department Overhead Control for $10,000.
C) debit to Cost of Goods Sold for $32,000.
D) credit to Cost of Goods Sold for $10,000.

Question 72

Fulton Company incurred actual overhead costs of $160,000 for the year. A budgeted factory-overhead rate of 210 percent of direct-labour cost was determined at the beginning of the year. Budgeted factory overhead was $157,500, and budgeted direct-labour cost was $75,000. Actual direct-labour cost was $80,000 for the year. The disposition of the variance, assuming an immaterial amount, would include a

A) debit to Cost of Goods Sold for $8,000.
B) credit to Cost of Goods Sold for $8,000.
C) debit to Cost of Goods Sold for $2,500.
D) credit to Cost of Goods Sold for $2,500.

Question 73

If the overhead control account has a debit balance at the end of the period,

A) overhead is overapplied and the difference should be credited to the proper accounts.
B) overhead is overapplied and the difference should be debited to the proper accounts.
C) overhead is underapplied and the difference should be debited to the proper accounts.
D) overhead is underapplied and the difference should be credited to the proper accounts.

Question 74

A variance that results when applied overhead is greater than the actual overhead cost incurred.

Question 75

A cost accumulation method that accumulates costs by processes or departments.

Question 76

The most widely used approach to disposing of overhead variances is

A) proration.
B) to allocate between cost of goods sold and finished goods inventory.
C) immediate write-off.
D) to capitalize as a cost of finished goods inventory.

Question 77

Fulton Company incurred actual overhead costs of $160,000 for the year. A budgeted factory-overhead rate of 210 percent of direct-labour cost was determined at the beginning of the year. Budgeted factory overhead was $157,500, and budgeted direct-labour cost was $75,000. Actual direct-labour cost was $80,000 for the year. The disposition of the variance, assuming a material amount, would include a

A) debit to Factory Department Overhead Control for $8,000.
B) credit to Factory Department Overhead Control for $2,500.
C) debit to Cost of Goods Sold for $8,000.
D) credit to Cost of Goods Sold for $2,500.

Question 78

The overhead assigned to production using a predetermined overhead rate.

Question 79

A variance that results when the actual overhead cost incurred is greater than applied overhead

Question 80

The following information was gathered for Larsen Company for the year ended December 31, 20X1.

Assume that direct-labour hours is the cost driver.What is the amount of over/underapplied overhead?

A) $1,365 underapplied.
B) $1,365 overapplied.
C) $3,225 underapplied.
D) $1,960 overapplied.