Deck 5: Job Costing

Question 1

The end goal of process costing and job costing at a manufacturing company is to find the cost of producing one unit of product.

Answer 1

True

Question 2

Job costing should only be used by manufacturers.

Answer 2

False

Question 3

Which of the following is most likely to use job order costing?

A) DuPont Chemical
B) Ashley Custom Furnishings
C) Exxon-Mobile (gasoline)
D) General Mills (cereal)

Answer 3

B

Question 4

A food and beverage company like Pepsi would most likely use process costing.

Question 5

What type of product costing system would a manufacturer of luxury yachts use?

A) Job costing
B) Process costing
C) Either job or process
D) Both job and process

Question 6

Which of the following is an example of an industry that would use a process costing rather than a job costing-system?

A) Boeing Jets
B) Coca-Cola
C) Centex Custom Homes
D) Snyder & Lewis, Attorneys at Law

Question 7

Companies use process costing when their products or services vary in terms of materials needed, time required to complete the product, and/or the complexity of the production process.

Question 8

International Financial Reporting Standards (IFRS) mandates the type of product costing system (job costing or process costing) that must be used by a manufacturer for external reporting.

Question 9

Job costing is most likely used in which of the following industries?

A) Chemicals
B) Food and beverage
C) Pharmaceuticals
D) Commercial building construction

Question 10

An example of an industry that uses process costing might be a

A) custom printer.
B) company that makes cement.
C) shipbuilder.
D) homebuilder.

Question 11

What are the two basic types of costing systems?

A) Job costing and process costing
B) Periodic costing and perpetual costing
C) Product costing and materials inventory costing
D) Periodic costing and process costing

Question 12

All manufacturers use either a pure process costing system or a pure job costing system.

Question 13

Which product costing system would better account for a unique product?

A) Job costing system
B) Overhead costing system
C) Process costing system
D) Product costing system

Question 14

Process costing is a useful system for tracking the costs of building a house.

Question 15

Job costing systems accumulate the costs for each individual job.

Question 16

What type of product costing system would a manufacturer of plywood use?

A) Job costing
B) Process costing
C) Either job or process
D) Both job and process

Question 17

Companies should always use job costing rather than process costing.

Question 18

What types of businesses can use a job costing system?

A) Manufacturing and merchandising businesses
B) Service and manufacturing businesses
C) Service and merchandising businesses
D) Service, manufacturing, and merchandising businesses

Question 19

Process costing is often used by professional service providers, such as law firms.

Question 20

Job costing is used by companies that produce large numbers of identical units of production in a continuous fashion.

Question 21

Which of the following would be appropriately costed using a process costing system?

A) Oil refining
B) A law firm managing individual legal cases
C) Assembly of individual aircraft by Bombardier
D) Movies produced by Lions Gate Entertainment

Question 22

A labour time record identifies the employee and the amount of time the employee spent on a particular job.

Question 23

A job cost record is a document that accumulates direct materials costs, direct labour costs and manufacturing overhead costs assigned to jobs.

Question 24

The quantities of incoming shipments of raw materials are counted and recorded on a receiving report.

Question 25

Briefly explain the difference between job order and process costing and give examples of each.

Question 26

Job order costing might be used by a

A) candy manufacturer.
B) crude oil refinery.
C) custom home builder.
D) cereal maker.

Question 27

The system for assigning costs to unique cost objects is called

A) time costing.
B) process costing.
C) service costing.
D) job costing.

Question 28

The bill of materials lists all of the raw materials needed to manufacture the job.

Question 29

A receiving report is used to order needed materials from suppliers.

Question 30

Which of these documents is used to accumulate the costs of a job?

A) Labour time record
B) Materials inventory requisition form
C) Job cost record
D) Bill of materials

Question 31

A receiving report is typically a duplicate of the purchase order, but without the quantity pre-listed on the form.

Question 32

Which of these documents substantiates the balance of the raw materials inventory account shown on the company's balance sheet?

A) Raw materials records
B) Bill of materials
C) Materials requisition
D) Labour time record

Question 33

A production schedule indicates the quantity and types of inventory that are scheduled to be manufactured during the period.

Question 34

A job cost record is used to record direct materials and direct labour. Manufacturing overhead is not recorded on a job cost record because it cannot be traced to a specific job.

Question 35

Which of the following would be appropriately costed using a job costing system?

A) Bank clearing at TD Canada Trust
B) Beverage production
C) Replacing a homeowner's furnace
D) Lumber dealing by Weyerhaeuser

Question 36

At a manufacturing company, inventory flows from work in process inventory, to raw materials inventory, to finished goods inventory.

Question 37

When raw materials are transferred out of the storeroom to the factory, their cost is transferred out of raw materials inventory and into finished goods inventory.

Question 38

A production schedule always covers a one-year period of time.

Question 39

A type of costing used for many similar products is called

A) batch costing.
B) process costing.
C) service costing.
D) job costing.

Question 40

When the products are shipped to customers, the cost of manufacturing those products becomes Cost of Goods Sold (COGS) shown on the company's balance sheet.

Question 41

A source document for tracking employee hours is called a

A) job cost record.
B) process costing.
C) labour time record.
D) job costing.

Question 42

Which of the following would most likely be a direct cost in a manufacturing company?

A) supervision and engineering
B) utilities
C) repairs
D) raw materials

Question 43

Which comes first in the flow of costs?

A) Cost of goods sold
B) Finished goods inventory
C) Raw materials inventory
D) Work in process inventory

Question 44

What is the document which is prepared by manufacturing personnel to request materials for the production process?

A) Cost ticket
B) Job cost record
C) Manufacturing ticket
D) Materials requisition

Question 45

Which comes last in the flow of costs?

A) Cost of goods sold
B) Finished goods inventory
C) Raw materials inventory
D) Work in process inventory

Question 46

Which of these documents informs the storeroom to send specific materials to the factory floor?

A) Receiving report
B) Bill of materials
C) Materials requisition
D) Purchase order

Question 47

Briefly explain the cost flow of materials through a job costing system from the purchase to the sale.

Question 48

Payroll costs for factory employees who do not work directly on the product are considered

A) direct labour.
B) manufacturing overhead.
C) selling expenses.
D) administrative costs.

Question 49

The assignment of direct and indirect materials to cost objects reduces

A) finished goods inventory.
B) manufacturing overhead.
C) raw materials inventory.
D) work in process inventory.

Question 50

Custom Cedar Products (CCP) manufactures a line of outdoor furniture. In May, CCP received an order Outdoor Spaces for 20 thirty inch planter. The order from Outdoor Spaces became Job 2100 at CCP.
A Materials requisition for Job 2100 is presented in the following section. In addition to the materials requisition, the labour time records (partial) or the week that these tables were made are presented. Other products were also being produced during that week, so not all labour belongs to Job 2100, but all labour belonging to Job 2100 is shown.
Requirements:
1. Calculate the total for the Materials Requisition form. Post the information from the Materials Requisition form to the Job Cost Record.
2. Complete the labour time records for each of the employees and post the information to Job 2100 to the Job Cost Record.
3. Complete the Job Cost Record.

Question 51

Custom Cedar Products (CCP) manufactures a line of outdoor furniture. In November, CCP received an order Outdoor Spaces for six 42 inch diameter tables with umbrella stand. The order from Outdoor Spaces became job 1296 at CCP. A Materials requisition for Job 1296 is presented in the following section. In addition to the materials requisition, The labour time records (partial) or the week that these tables were made are presented. Other products were also being produced during that week, so not all labour belongs to Job 1296, but all labour belonging to Job 1296 is shown.
Requirements:
1. Calculate the total for the Materials Requisition form. Post the information from the Materials Requisition form to the Job Cost Record.
2. Complete the labour time records for each of the employees and post the information to the Job Cost Record for Job 1296.
3. Complete the Job Cost Record.

Question 52

A document that accumulates job costs is called a

A) job cost record.
B) bill of materials.
C) labour time record.
D) production schedule.

Question 53

When used, raw materials

A) would be classified as direct materials.
B) would be classified as direct labour.
C) would be classified as indirect materials.
D) cannot be classified based on the information provided.

Question 54

When direct materials are requisitioned, they flow directly into

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

Question 55

Custom Cedar Products (CCP) manufactures a line of outdoor furniture. In June, CCP received an order Outdoor Spaces for 25, 54 inch tables with umbrella stand. The order from Outdoor Spaces became Job 3300 at CCP. A Materials requisition for Job 3300 is presented in the following section. In addition to the materials requisition, the labour time records (partial) or the week that these tables were made are presented. Other products were also being produced during that week, so not all labour belongs to Job 3300, but all labour belonging to Job 3300 is shown.
Requirements:
1. Calculate the total for the Materials Requisition form. Post the information from the Materials Requisition form to the Job Cost Record.
2. Complete the labour time records for each of the employees and post the information to Job 3300 to the Job Cost Record.
3. Complete the Job Cost Record.

Question 56

Assigning direct costs to a cost object is called

A) cost allocation.
B) job costing.
C) process costing.
D) cost tracing.

Question 57

Custom Cedar Products (CCP) manufactures a line of outdoor furniture. In April, CCP received an order Outdoor Spaces for ten 36 inch planter. The order from Outdoor Spaces became Job 1405 at CCP. A Materials requisition for Job 1405 is presented in the following section. In addition to the materials requisition, the labour time records (partial) or the week that these tables were made are presented. Other products were also being produced during that week, so not all labour belongs to Job 1405, but all labour belonging to Job 1405 is shown. Requirements:
1. Calculate the total for the Materials Requisition form. Post the information from the Materials Requisition form to the Job Cost Record.
2. Complete the labour time records for each of the employees and post the information to Job 1405 to the Job Cost Record.
3. Complete the Job Cost Record.

Question 58

An internal request for raw materials calls for a ________ to be completed.

A) purchase order
B) bill of materials
C) materials requisition
D) labour time record

Question 59

Which comes second in the flow of costs?

A) Cost of goods sold
B) Finished goods inventory
C) Raw materials inventory
D) Work in process inventory

Question 60

Which comes third in the flow of costs?

A) Cost of goods sold
B) Finished goods inventory
C) Raw materials inventory
D) Work in process inventory

Question 61

Manufacturers follow four steps to implement a manufacturing overhead allocation system. The last step is to

A) select an allocation base and estimate the total amount that will be used during the year.
B) allocate some manufacturing overhead to each individual job.
C) estimate total manufacturing overhead costs for the coming year.
D) calculate a predetermined manufacturing overhead rate.

Question 62

Allocating manufacturing overhead to jobs simply means "splitting up" the total manufacturing overhead costs among the jobs produced during the year.

Question 63

Manufacturers follow four steps to implement a manufacturing overhead allocation system. The last step is to estimate the total amount of manufacturing overhead costs for the year.

Question 64

The primary factor causing a "cost" is called a

A) cost allocation.
B) cost driver.
C) materials requisition.
D) predetermined manufacturing overhead rate.

Question 65

The predetermined manufacturing overhead rate is calculated by multiplying the total estimated manufacturing overhead costs by the total estimated amount of the allocation base.

Question 66

The cost of wages paid to assembly-line workers should be treated as a manufacturing overhead cost.

Question 67

Manufacturing overhead costs can be directly traced to jobs.

Question 68

Computing the predetermined manufacturing overhead rate is done

A) before the period starts.
B) during the period.
C) at the end of the period.
D) at any time.

Question 69

International Financial Reporting Standards (IFRS) mandate that manufacturing overhead must be treated as a product cost for financial reporting purposes.

Question 70

Manufacturers follow four steps to implement a manufacturing overhead allocation system. The first step is to calculate a manufacturing overhead rate.

Question 71

Assigning manufacturing overhead costs and other indirect costs is called

A) cost allocation.
B) cost driver.
C) materials requisition.
D) predetermined manufacturing overhead rate.

Question 72

The key to allocating indirect manufacturing costs to jobs is to identify an appropriate allocation base.

Question 73

Manufacturers follow four steps to implement a manufacturing overhead allocation system. The first step is to

A) select an allocation base and estimate the total amount that will be used during the year.
B) allocate some manufacturing overhead to each individual job.
C) estimate total manufacturing overhead costs for the coming year.
D) calculate a predetermined manufacturing overhead rate.

Question 74

An estimated manufacturing overhead rate computed before the year begins is a(n)

A) cost allocation.
B) cost driver.
C) actual manufacturing overhead rate.
D) estimated amount of the overhead costs.

Question 75

Manufacturing overhead costs can have more than one cost driver.

Question 76

Direct labour hours are often used as a cost driver for allocating manufacturing overhead even though direct labour does not cause most overhead costs to occur.

Question 77

Manufacturers follow four steps to implement a manufacturing overhead allocation system. The last step is to calculate a manufacturing overhead rate.

Question 78

An equal amount of manufacturing overhead should be allocated to each job.

Question 79

The overhead allocation base should be the cost driver of manufacturing overhead costs.

Question 80

The predetermined manufacturing overhead rate is calculated by dividing the total estimated manufacturing overhead costs by the total estimated amount of the allocation base.