Deck 14: Job-Order Costing and Process-Costing Systems

Question 1

Process costing averages costs over large numbers of nearly identical products.

Answer 1

True

Question 2

Companies that use job-order costing normally have uniform production steps.

Answer 2

False

Question 3

Job-order costing only applies to specific jobs with a single physical unit.

Answer 3

False

Question 4

The construction and printing industries normally use job-order costing.

Question 5

In job-order costing,time cards record the materials used in particular jobs.

Question 6

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

Question 7

Which industry does NOT use job-order costing?

A)construction
B)aircraft
C)printing
D)lumber

Question 8

Source documents used in job-order costing include ________.

A)labor time tickets
B)material requisitions
C)time cards
D)all of the above

Question 9

Hybrid-costing systems use a combination of ________.

A)job-order costing and process costing ideas
B)value-added and nonvalue-added ideas
C)job-order costing and job-cost sheets
D)job orders and program orders

Question 10

Which of the following statements concerning job-order costing is TRUE?

A)Job-order costing deals with great masses of similar items.
B)Job-order costing is used by the chemical industry.
C)Job-order costing is not a common system used in product costing.
D)Job-order costing applies costs to specific jobs which may consist of a single unit or a few similar units.

Question 11

In job-order costing,all the costs for a particular product or batch of products are recorded on the ________.

A)materials requisition form
B)labor time ticket
C)time card
D)job-cost record

Question 12

Some companies use hybrid costing,which blends the ideas from both job costing and process costing.

Question 13

Source documents used in job-order costing include material requisition forms and time cards.

Question 14

The ________ system is better suited for a single physical unit or a few similar units.

A)process-costing
B)job-order costing
C)activity-based costing
D)activity-based management

Question 15

The ________ account is supported by a file of job-cost records for partially completed jobs.

A)Direct Materials Inventory
B)Finished Goods Inventory
C)Cost of Goods Sold
D)Work-in-process Inventory

Question 16

Which industry is most likely to use a job-order costing system?

A)chemicals
B)plastics
C)meat packing
D)printing

Question 17

The ________ account is supported by a file of job-cost records for completed jobs.

A)Direct Materials Inventory
B)Work-in-process Inventory
C)Finished Goods Inventory
D)Factory Overhead Control

Question 18

The centerpiece of a job-order costing system is the balanced scorecard.

Question 19

Chemical and oil companies normally use process costing.

Question 20

Three types of costs are accumulated on job-cost records that include direct materials,________ and ________.

A)direct labor; actual factory overhead
B)direct labor; applied factory overhead
C)variable factory overhead; fixed factory overhead
D)direct labor; budgeted factory overhead

Question 21

In job-order costing,a debit to Work-in-Process Inventory is used to record ________.

A)a requisition of direct materials
B)the cost of goods completed
C)a sale of merchandise
D)purchase of direct materials

Question 22

Job-order costing is used.When direct materials are requisitioned for production,what account is credited?

A)Work-in-process Inventory
B)Accounts payable
C)Finished-goods Inventory
D)Direct-Materials Inventory

Question 23

In job-order costing,a debit to Finished Goods Inventory is used to record the ________.

A)requisition of direct materials
B)cost of goods completed
C)sale of merchandise
D)purchase of direct materials

Question 24

Ralph Company uses a job-order costing system and has the following data available: What is the cost of the ending inventory of Direct Materials?

A)$84,000
B)$90,000
C)$108,000
D)$174,000

Question 25

Job-order costing is used.What account is credited when direct labor costs are incurred?

A)Work-in-process Inventory
B)Finished Goods Inventory
C)Cost of Goods Sold
D)Accrued Payroll

Question 26

A home builder just completed the construction of a new home.The home builder uses job-order costing.Costs of $200,000 were incurred to construct the home.The home is ready for sale and is listed with a real estate broker.What journal entry is necessary when the home is completed?

Question 27

In a job-order system,accountants apply factory overhead costs to Work-in-process Inventory by using ________.

A)actual overhead costs
B)budgeted value chain costs
C)budgeted overhead rates
D)actual overhead rates

Question 28

Actual factory overhead costs are Depreciation expense--equipment of $1,000 and Depreciation expense--computers of $2,000.Job-order costing is used.The journal entry to record these actual costs would include ________.

A)debit to Factory Department Overhead Control $3,000
B)debit to Depreciation Expenseequipment $1,000 and debit to Depreciation Expensecomputers $2,000
C)credit to Factory Department Overhead Control $3,000
D)credit to Factory Department Overhead Applied $3,000

Question 29

Sandy Jensen Company uses a job-order costing system and has the following data available: The journal entry to record the cost of goods sold would include a ________.

A)debit to Finished Goods Inventory for $292,000
B)credit to Finished Goods Inventory for $260,000
C)credit to Work-in-process Inventory for $260,000
D)credit to Cost of Goods Sold for $292,000

Question 30

Beverly Bertonelli Company uses a job-order costing system and has the following data available: The journal entry to record the purchase of direct materials would include a ________.

A)debit to Work-in-process Inventory for $82,000
B)debit to Direct-Materials Inventory for $148,000
C)credit to Direct-Materials Inventory for $148,000
D)credit to Work-in-process Inventory for $148,000

Question 31

Jack Bergman Company uses a job-order costing system and has the following data available: The journal entry to record the actual 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 $169,000
C)debit to Work-in-process Inventory for $146,000
D)credit to Work-in-process Inventory for $169,000

Question 32

In job-order costing,the journal entry to record the application of factory overhead costs to jobs includes a debit to ________.

A)Factory Department Overhead Control
B)Factory Department Overhead Applied
C)Finished Goods Inventory
D)Work-in-process Inventory

Question 33

In job-order costing,the journal entry to record the transfer of completed goods from the production area would include a credit to ________.

A)Cost of Goods Sold
B)Finished Goods Inventory
C)Factory Department Overhead Control
D)Work-in-process Inventory

Question 34

Direct materials of $10,000 are requisitioned by the production supervisor for the production area.Job-order costing is used.The journal entry to record this transaction is:

Question 35

In job-order costing,actual factory overhead rates are used to apply factory overhead costs to products.

Question 36

Splitsville Company has two departments.Factory overhead costs are applied based on direct labor cost in Department A and machine hours in Department B.The following information is available:
Actual data for Job #10 are as follows:
Required:

A)Compute the budgeted factory overhead rate for Department A.
B)Compute the budgeted factory overhead rate for Department B.
C)What is the total overhead cost for Job #10?
D)If Job #10 consists of 50 units of product,what is the unit cost of this job?

Question 37

In job-order costing,a debit to Direct-Materials Inventory is used to record ________.

A)a requisition of direct materials for production
B)cost of goods completed
C)a sale of goods
D)a purchase of direct materials

Question 38

In job-order costing,a debit to Work-in-process Inventory is used to record ________.

A)a sale of merchandise
B)a purchase of direct materials
C)the cost of goods completed
D)a requisition of direct materials for production area

Question 39

Each job has its own job-cost record in a job-costing system.

Question 40

Helen Company uses a job-order costing system and has the following data available: The journal entry to record the cost of goods completed would include a ________.

A)credit to Finished Goods Inventory for $292,000
B)credit to Cost of Goods Sold for $256,000
C)debit to Work-in-process Inventory for $256,000
D)credit to Work-in-process Inventory for $292,000

Question 41

In activity-based costing systems,budgeted overhead rates for indirect costs are determined.Which department(s)prepare budgeted overhead rates?

A)production only
B)production and distribution only
C)all value chain functions
D)production and customer service only

Question 42

St.Luke's Hospital uses a job-order costing system for all patients who have surgery.The following information is available: The cost driver for all indirect costs is nursing hours.The hospital uses a budgeted rate for indirect costs.The budgeted rate for indirect costs for the pre-operating room is ________.

A)$21.00
B)$43.25
C)$66.00
D)$80.00

Question 43

In job-order costing,the journal entry to record the completion of goods would include a debit to Cost of Goods Sold.

Question 44

In job-order costing,the journal entry to record the completion of units in process would include a debit to Finished Goods Inventory.

Question 45

Choosing direct labor cost rather than direct labor hours as a cost driver for overhead costs implies that ________.

A)direct labor cost data is more accurate
B)direct labor cost data is easier to obtain
C)higher paid employees use proportionately less overhead support than lower paid employees
D)higher paid employees use proportionately more overhead support than lower paid employees

Question 46

In service and nonprofit organizations,a job order or product is called a ________.

A)job worksheet
B)job-cost record
C)job-cost sheet
D)program

Question 47

Activity-based costing systems increase product costing accuracy because it focuses on the ________ between the work performed and the consumption of resources.

A)link
B)bond
C)cause-and-effect relationship
D)weak relationship

Question 48

One of the primary purposes of an activity-based costing system is to ________.

A)focus on quality improvements in the production process
B)focus on cost reduction in the production process
C)eliminate all overhead costs for manufactured products
D)increase the accuracy of product costs so managers can make better decisions

Question 49

Examples of potential factory overhead activity centers include receiving,testing and packaging.

Question 50

What journal entry is necessary to apply factory overhead to jobs in job-order costing?

Question 51

Bruce Company uses job-order costing.The company has gathered the following data:
Factory overhead costs are applied at 90% of direct labor costs.
Required:

A)Prepare the required journal entries for the above transactions.
B)Prepare the journal entry to dispose of the overhead variance using the immediate write-off method.

Question 52

In job-order costing,the journal entry to record applied overhead costs would include a debit to Work-in-Process Inventory.

Question 53

CCC Company uses job-order costing.The following is a summary of factory operations:
Factory overhead costs are applied at 70% of direct labor costs.
Required:

A)Prepare the required journal entries for the above transactions.
B)Prepare the journal entry to dispose of the overhead variance using the immediate write-off method.

Question 54

In job-order costing,the journal entry to record actual factory overhead costs incurred would include a credit to Factory Department Overhead Control.

Question 55

In nonprofit organizations,the challenge is to apply the costs from various departments to different ________.

A)service organizations
B)nonprofit revenue accounts
C)nonprofit expense accounts
D)programs

Question 56

Regardless of the nature of a company's production system,there will always be resources that are shared among different products.

Question 57

A company uses job-order costing.At the end of the year,applied factory overhead costs were $10,000 and actual factory overhead costs were $12,000.The company uses the immediate write-off method to dispose of variances.What journal entry is necessary under the immediate write-off method?

Question 58

In job-order costing,the journal entry to record the requisition of direct materials for production would include a debit to Direct Materials Inventory.

Question 59

In nonprofit organizations,a program is defined as a(n)________.

A)identifiable group of activities that produces outputs in the form of consumable products
B)identifiable group of activities that produces outputs in the form of services
C)class of products
D)none of the above

Question 60

When public accounting firms apply indirect costs to audit engagements,they use ________ or ________ as the cost driver.

A)direct labor cost; equipment usage
B)direct labor cost; direct labor hours
C)hours of equipment use; hours of computer use
D)traveling costs; hours of clerical assistance

Question 61

The chemical and glass industries normally use job costing.

Question 62

Assume a company uses process costing.When factory overhead is applied,Finished Goods Inventory is the debit part of the journal entry.

Question 63

Unlike job-order costing,process costing requires only one work-in-process inventory account.

Question 64

Which statement regarding process costing is TRUE?

A)Process-costing systems are usually simpler than job-order costing systems.
B)Individual jobs exist in process costing.
C)The unit cost for process costing is found by accumulating the costs for all the manufacturing departments and dividing the total by the number of units produced.
D)The process-costing approach does not distinguish between individual units of product.

Question 65

In process costing,units that are started but NOT completed by the end of the accounting period are called ________.

A)sold units
B)units in ending direct materials inventory
C)units in ending work-in-process inventory
D)units in ending finished goods inventory

Question 66

________ is the system that applies costs to similar products that are mass-produced in continuous fashion through a series of production processes.

A)Job-order costing
B)JIT costing
C)Activity-based costing
D)Process costing

Question 67

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

Question 68

Process costing can be used for ________ activities.

A)manufacturing
B)nonmanufacturing
C)manufacturing and nonmanufacturing
D)none of the above

Question 69

Process costing accumulates costs for a period and divides them by quantities produced during the period to get average costs.

Question 70

Managers need to know product costs to make ongoing decisions such as which products to emphasize or deemphasize and the pricing of products.

Question 71

Which output would NOT use a process costing system?

A)flour
B)glass
C)toothpaste
D)building

Question 72

Assume a company uses process costing.When goods are transferred from one processing department to another,the journal entry requires a debit to ________.

A)Work-in-process Inventory
B)Finished Goods Inventory
C)Cost of Goods Sold
D)Direct Materials Inventory

Question 73

St.Joseph's Hospital uses a job-order costing system for all patients who have surgery.The following information is available: The cost driver for all indirect costs is nursing hours.The hospital uses a budgeted rate for indirect costs.A patient spent 8 hours in the pre-operating room,4 hours in the operating room and 96 hours on the surgery recovery floor.What amount of indirect costs will be applied to this patient?

A)$336.00
B)$600.00
C)$7,680
D)$8,112

Question 74

Which of the following statements about job-order costing and process costing is TRUE?

A)Process costing uses a single work-in-process account and job-order costing uses multiple work-in-process accounts.
B)Job-order costing uses a single work-in-process account for each job and process costing uses one work-in-process account for each process.
C)Process costing is used for products that are easily separated and individually identifiable.
D)Both process costing and job-order costing use a single work-in-process account.

Question 75

St.Patrick's Hospital uses a job-order costing system for all patients who have surgery.The following information is available: The cost driver for all indirect costs is nursing hours.The hospital uses a budgeted rate for indirect costs.The budgeted rate for indirect costs for the operating room is ________.

A)$21.00
B)$66.00
C)$69.75
D)$80.00

Question 76

In process costing,the central product-costing problem is how each department computes the cost of ________.

A)completed goods transferred out of the production area
B)completed goods waiting to be sold
C)uncompleted goods in the production area
D)uncompleted goods in the production area and completed goods transferred out of the production area

Question 77

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

Question 78

Which of the following is NOT a step in carrying out process costing?

A)calculate output in terms of equivalent units
B)calculate cost per equivalent unit
C)summarize the total costs to account for
D)summarize the total costs of a job

Question 79

Process-costing systems apply costs to like products that are usually mass-produced in continuous fashion through a series of production processes.

Question 80

St.Michael's Hospital uses a job-order costing system for all patients who have surgery.The following information is available: The cost driver for all indirect costs is nursing hours.The hospital uses a budgeted rate for indirect costs.The budgeted rate for indirect costs for the surgery recovery floor is ________.

A)$42.00
B)$45.75
C)$75.00
D)$80.00