Deck 5: Job Costing Systems

Question 1

The way spoilage is handled in the accounting records depends on whether the spoilage is considered normal or abnormal.

Answer 1

True

Question 2

The accounting standard dealing with inventories is AASB 102.

Answer 2

True

Question 3

In a job costing system the cost object is a job.

Answer 3

True

Question 4

All of the following are likely to use job costing except:

A) Chartered accountant
B) Portrait painter
C) Printing shop
D) Cheese manufacturer

Question 5

Job costing is frequently used in service industries.

Question 6

Inspection for spoilage should always be carried out at the end of the production process and not at an earlier period.

Question 7

Generally all the costs assigned to a job are incremental, i.e. they would not be incurred if the job was not done.

Question 8

The job cost record does not include non-traceable costs assigned to a particular job.

Question 9

Overapplied overhead occurs when actual costs are more than the amount of overhead allocated.

Question 10

Inventoriable product costs consist of manufacturing and non-manufacturing costs.

Question 11

Fixed and variable overhead costs are combined in one cost pool.

Question 12

Under a job costing system rework costs are often not tracked.

Question 13

Under a job costing system the work-in-process ledger account is what type of account?

A) asset
B) liability
C) revenue
D) expense

Question 14

Under a job costing system, as actual overhead costs are incurred, they are debited to an overhead control account.

Question 15

Under a job costing system the opportunity costs of spoilage are generally not measured.

Question 16

A cost driver is a synonym for an allocation base.

Question 17

Under a job costing system the total cost of all the incomplete jobs recorded in the subsidiary ledger is reconciled to the

A) Cost of goods sold account
B) Finished goods inventory account
C) Work-in-process account
D) Direct materials account

Question 18

Job costing is used when each prod uct or service is mass produced,e.g.
the production of chess sets.

Question 19

The cost that would not be included as an inventoriable product cost is:

A) Factory manager's salary
B) Depreciation of factory equipment
C) Selling cost
D) None, i.e. all would be included as inventoriable product costs

Question 20

The actual allocation rate under a job costing system is; actual overhead cost divided by actual quantity of allocation base.

Question 21

In a job costing system the accounting entry to record the purchase of direct materials is:

A) debit to raw materials inventory; credit to work in process
B) debit to raw materials inventory; credit to accounts payable
C) debit to work in process; credit to overhead control account
D) debit to work in process; credit to bank

Question 22

The statement concerning actual and normal costing that is true is:

A) Actual costing is carried out at the beginning of the accounting period
B) Information from normal costing is used for pricing purposes
C) Under actual costing direct labour is traced to a job and under normal costing it is allocated
D) All of the statements are true

Question 23

Tulip uses a job costing system that allocates overhead as a percentage of direct labour costs. The budget for this year was; direct materials $60,000, direct labour $30,000, overhead $45,000. The actual costs for this year were; direct materials $50,000, direct labour $35,000, overhead $45,000. How much overhead was over/under allocated?

A) $0
B) $150 overallocated
C) $21,550 underallocated
D) $7,500 overallocated

Question 24

The true statement is:

A) Period costs are expensed in the period the product is sold
B) Period costs are initially inventoried, then expensed
C) Product costs are expensed as the product is produced
D) Product costs are expensed in the period the product is sold

Question 25

The following information is available for product K87. The cost of a job for 1,500 units of product K87, which uses 33 machine hours, is:

A) $2,300
B) $2.11
C) $3,158
D) $1,358

Question 26

If estimated production overhead in the printing department is $120,000 and actual overhead is $116,000 and estimated machine hours in the printing department are 30,000 hours and actual machine hours are 32,000 hours, the under or over applied overhead is:

A) $12,000 overapplied
B) $4,000 underapplied
C) $4,000 overapplied
D) $8,000 underapplied

Question 27

In a job costing system the accounting entry to record the completion of job No 876 is:

A) debit cost of goods sold; credit work in process
B) debit work in process; credit profit and loss summary account
C) debit finished goods inventory; credit work in process
D) none of the above

Question 28

Prime costs are $72,000 for the period and overhead is 40% of the period's total manufacturing costs. If beginning work in process was $12,500 and ending work in process is $10,000 the cost of goods manufactured is:

A) $122,500
B) $120,000
C) $74,500
D) $182,500

Question 29

In job costing the allocation of overhead results in a debit to:

A) the overhead control account
B) the work in process inventory account
C) the finished goods inventory account
D) the cost of goods sold account

Question 30

Chloes Sportswear manufactures a specialty line of mini skirts using a job order cost system. During June, the following costs were incurred in completing Job F28: direct materials $12,700; direct labour $3,200; non-factory administrative costs $1,200; and selling costs $5,600. Factory overhead was applied at the rate of $8.60 per machine hour and Job F28 required 190 machine hours. If Job F28 resulted in 1300 good mini skirts, the cost of goods sold per unit would be

A) $14.41
B) $13.49
C) $18.71
D) $11.03

Question 31

When developing an estimated overhead allocation rate which of the following could be used for the numerator?

A) actual annual overhead cost
B) estimated annual overhead cost
C) estimated direct labour hours
D) estimated annual revenue

Question 32

A rule of thumb for deciding if overhead over or under applied is a material amount is:

A) if it is more than 5% of total actual overhead costs
B) if it is more than 10% of total actual overhead costs
C) if it is more than 5% of COGS
D) if it is more than 7% of COGS

Question 33

The balance of overhead over or under applied for the period, if it is a material amount:

A) is pro-rated over cost of goods sold, and finished goods
B) is assigned to cost of goods sold
C) is carried forward to become the opening balance in the next accounting period
D) is pro-rated over cost of goods sold, work in process and finished goods

Question 34

The cost of normal spoilage arising from the requirements of a specific job:

A) is charged to general overhead
B) is charged to the job
C) is charged to the income statement as a loss
D) none of the above

Question 35

In a job costing system the accounting entry to record the payment of factory wages for the month is:

A) debit cost of goods sold; credit bank
B) debit work in process; credit overhead control account
C) debit factory wages; credit work in process
D) none of the above

Question 36

The cost credited to the work in process account and debited to the finished good account is known as:

A) total manufacturing costs
B) cost of goods sold
C) cost of goods manufactured
D) cost of goods available for sale

Question 37

If estimated production overhead in the printing department is $120,000 and actual overhead is $116,000 and estimated machine hours in the printing department are 30,000 hours and actual machine hours are 32,000 hours, using normal costing what is the overhead recovery rate for the printing department?

A) $3.87 per machine hour
B) $4 per machine hour
C) $3.75 per machine hour
D) $3.63 per machine hour

Question 38

In a job costing system the accounting entry made at the time job 664 is delivered to the customer is:

A) debit to cost of goods sold; credit to finished goods inventory
B) debit to finished goods inventory; credit to work in process
C) debit to sales; credit to work in process
D) debit to cost of goods sold; credit to work in process

Question 39

Estimated production overhead in the printing department is $150,000 and actual overhead is $154,000 and estimated machine hours in the printing department are 3,000 hours and actual machine hours are 3,300 hours. Job 175 used 6 printing machine hours. Using normal costing what is the printing department overhead charged to job 175?

A) $308
B) $278
C) $273
D) $300

Question 40

Abnormal spoilage costs generally appear in the external financial accounts

A) on the balance sheet as part of work in process
B) on the income statement as part of some other item
C) on the balance sheet as part of finished goods
D) on the income statement as a line item 'loss on abnormal spoilage'
E)g. cost of goods sold

Question 41

Which of these is not an uncertainty in measuring job costs?

A) Whether and how to trace direct costs
B) The choice of overhead cost pools
C) The choice of allocation bases
D) None of the above, i.e. all are uncertainties in measuring job costs

Question 42

Upon inspection Joe's Jumpers found that all the jumpers in Batch #987 had had the sleeves sewn in backwards. One of the new machinists had not been properly trained, which is highly unusual. The jumpers had to be thrown away. This is an example of:

A) scrap
B) rework
C) abnormal spoilage
D) both a and c

Question 43

Pete's Plastic Products makes plastic toys. The injection molding machines leave behind plastic that can be ground up and used again in the next batch of production. The entry to record this in the ledger includes:

A) a credit to work in process inventory
B) a credit to overhead control
C) a debit to raw materials inventory
D) both a and c

Question 44

The statement concerning job costing that is untrue is:

A) Under normal costing overhead is allocated to jobs using the estimated overhead allocation rate
B) Under normal costing overhead is allocated to jobs using the estimated volume of usage of the allocation base
C) Actual job costs will almost certainly be different from estimated job costs
D) Managers monitor operations by comparing actual job costs to the original estimate

Question 45

Gloria Garments makes a generic brand of uniform it sells to a multinational chain or retail stores. Defective units have their labels removed and are sold as 'seconds'. This is an example of:

A) scrap
B) rework
C) normal spoilage
D) fashion suicide