Question 1

The source document that captures how much time a worker has spent on various jobs during the period is a

Accepted Answer

A labor time ticket is used to capture the amount of time a worker has spent on a specific job, allowing for accurate tracking of labor costs associated with each job. The other options listed do not capture this information. A cost driver sheet may capture various cost factors that influence the overall cost of a job, but it would not specifically capture labor time. A materials requisition form would capture the materials used in a job, but not the labor hours spent. A job cost sheet would gather various costs associated with a job, including labor, but would not be the source document for tracking labor hours.

Question 2

Which of the following types of firms would most likely use job order costing?

Accepted Answer

Job order costing is used by firms that offer customized products or services. Huey, Lewey & Dewie, Attorneys would use job order costing because legal services are tailored to the needs of individual clients.

Question 3

Manufacturing overhead was estimated to be $400,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $415,000,actual labor hours were 21,000.The amount of manufacturing overhead applied to production would be

Accepted Answer

The answer of Manufacturing overhead was estimated to be $400,000...

Question 4

The total amount of cost assigned to jobs that were completed during the year is the cost of goods sold.The total amount of cost assigned to jobs that were completed during the year is the cost of goods manufactured.

Accepted Answer

The cost of goods manufactured refers to the total production cost of goods completed during the year, while the cost of goods sold includes the cost of goods manufactured plus any beginning inventory, minus ending inventory.

Question 5

Manufacturing overhead was estimated to be $200,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $215,000,actual labor hours were 21,000.The amount of manufacturing overhead applied to production would be

Accepted Answer

The predetermined overhead rate is $200,000 / 20,000 hours = $10 per hour. Applied overhead is $10 * 21,000 hours = $210,000.

Question 6

To eliminate underapplied overhead at the end of the year,Manufacturing Overhead would be credited and Cost of Goods Sold would be debited.If manufacturing overhead is underapplied during the year,Manufacturing Overhead will need to be credited to bring the account balance to zero,while Cost of Goods Sold would be debited.

Accepted Answer

This is correct. To eliminate underapplied overhead at the end of the year, Manufacturing Overhead would be credited and Cost of Goods Sold would be debited. If manufacturing overhead is underapplied during the year, Manufacturing Overhead will need to be credited to bring the account balance to zero, while Cost of Goods Sold would be debited.

Question 7

If there is a debit balance in the Manufacturing Overhead account at the end of the period,overhead was underapplied.If there is a debit balance in the Manufacturing Overhead account at the end of the period,actual is greater than applied overhead,so overhead was underapplied.

Accepted Answer

A debit balance in the Manufacturing Overhead account indicates that actual overhead costs were greater than the applied overhead costs. Therefore, if there is a debit balance at the end of the period, overhead was underapplied.

Question 8

Manufacturing overhead was estimated to be $400,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $415,000,actual labor hours were 21,000.The predetermined manufacturing overhead rate would be

Accepted Answer

The answer of Manufacturing overhead was estimated to be $400,000...

Question 9

Which of the following types of firms would most likely use process costing?

Accepted Answer

Process costing is commonly used in industries where mass production of identical or similar products occur, such as the food and beverage industry. Sunshine Soft Drinks is most likely to use process costing as they are producing large amounts of the same product. Superior Auto Body & Repair, Crammond Custom Cabinets, and Jackson & Taylor Tax Service are all service-based businesses and do not produce a large volume of identical products, making them less likely to use process costing.

Question 10

All the costs assigned to an individual job are summarized on a

Accepted Answer

The job cost sheet is a document that summarizes all the costs assigned to an individual job, including direct materials, direct labor, and overhead. Cost driver sheets, materials requisition forms, and labor time tickets are documents used to track costs, but they do not summarize all the costs assigned to a single job.

Question 11

In a service firm,the cost associated with time that employees spend on training,paperwork,and supervision is considered part of manufacturing overhead.Service firms incur many indirect costs that cannot be traced to specific clients or accounts.Examples include the nonbillable time that employees spend on training,paperwork,and supervision.These indirect costs are treated just like manufacturing overhead in a factory.

Accepted Answer

This statement is true as it accurately describes how indirect costs in service firms are treated like manufacturing overhead in factories.

Question 12

Which of the following is a characteristic of a manufacturing environment that would use job order costing?

Accepted Answer

Job order costing is used when a company produces differentiated products, meaning each product has unique characteristics or requires different materials, labor, and overhead costs. This method allows for production costs to be tracked and assigned to each individual product, which is necessary when each product has its own unique cost driver.

Question 13

To eliminate underapplied overhead at the end of the year,Manufacturing Overhead would be debited and Cost of Goods Sold would be credited.If manufacturing overhead is underapplied during the year,Manufacturing Overhead will need to be credited to bring the account balance to zero,while Cost of Goods Sold would be debited.

Accepted Answer

To eliminate underapplied overhead, Manufacturing Overhead should be credited and Cost of Goods Sold should be debited, not the other way around.

Question 14

For service firms,the primary driver used to assign cost is direct material.Because service firms tend to be labor intensive,the primary driver used to assign cost is billable hours.

Accepted Answer

The statement is false. For service firms, the primary driver used to assign cost is billable hours since they are more labor-intensive than material-intensive.

Question 15

Manufacturing overhead was estimated to be $200,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $215,000,actual labor hours were 21,000.The predetermined overhead rate would be

Accepted Answer

The predetermined overhead rate is calculated by dividing the estimated manufacturing overhead by the estimated direct labor hours: $200,000 / 20,000 hours = $10.00 per hour.

Question 16

The cost of materials used on a specific job is first captured on which source document?

Accepted Answer

The materials requisition form is used to request materials from the warehouse or store, and is the first source document to capture the cost of materials used on a specific job. The cost driver sheet is used to identify the cost drivers for a particular process or activity. The labor time ticket captures the time spent by an employee on a specific job, and the process cost sheet summarizes the costs associated with a particular production process.

Question 17

Manufacturing overhead is applied to each job using which formula?

Accepted Answer

Manufacturing overhead is applied using the predetermined overhead rate multiplied by the actual value of the allocation base for the job.

Question 18

The most common method for disposing of the balance in Manufacturing Overhead is to make a direct adjustment to Cost of Goods Sold.The most common method for disposing of the balance in Manufacturing Overhead is to make a direct adjustment to Cost of Goods Sold.Doing so makes sense as long as most of the jobs worked on during the period were completed and sold.

Accepted Answer

Making a direct adjustment to Cost of Goods Sold is a common method for disposing of the balance in Manufacturing Overhead, especially if most of the jobs worked on during the period were completed and sold. This helps allocate the overhead costs to the products sold and adjust the cost of goods sold accordingly.

Question 19

A predetermined overhead rate is calculated using which formula?

Accepted Answer

A predetermined overhead rate is calculated by dividing the estimated manufacturing overhead cost by the estimated units in the allocation base. This formula is used to allocate overhead costs to products or services and can help companies to more accurately price their products or services, as well as control their costs. Choice D is the formula that uses this calculation.

Question 20

Manufacturing overhead was estimated to be $500,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $450,000,actual direct labor hours were 19,000.The predetermined overhead rate would be

Accepted Answer

The predetermined overhead rate is calculated by dividing the estimated manufacturing overhead by the estimated direct labor hours: $500,000 / 20,000 hours = $25.00 per direct labor hour.

Quiz 2: Job Order Costing