Question 1

Which of the following accounts is reported on the balance sheet?

Accepted Answer

All three accounts (Raw Materials Inventory, Work in Process Inventory, and Finished Goods Inventory) are reported on the balance sheet as they are part of the inventory accounts.

Question 2

At the time indirect materials are issued to production,the balance in the:

Accepted Answer

When indirect materials are issued to production, their cost is recorded as an increase in the Manufacturing Overhead account, reflecting the fact that these costs are part of the overhead that will be allocated to the products being manufactured.

Question 3

An example of a product or service that would most likely be accounted for using a process costing system would be:

Accepted Answer

A vitamin manufacturer would most likely be accounted for using a process costing system as the production of vitamins is a continuous, standardized process that involves multiple stages of production. This type of system is designed to track the cost of each stage of production and allocate the costs to each unit produced.

Question 4

In a job-order costing system,the subsidiary accounts for the Work in Process Inventory account are the:

Accepted Answer

Job cost sheets are used to track the costs associated with a particular job or work order as it moves through the production process. These costs are accumulated in the Work in Process Inventory account, which represents the total cost of all incomplete jobs currently in production. Standard cost cards are used in a standard costing system, rather than a job-order costing system, to establish and maintain predetermined standard costs for materials, labor, and overhead. Individual Accounts Payable accounts are used to track payments to suppliers, and are not directly related to the Work in Process Inventory account. The cost of production report is a summary of the costs incurred during a production period, and is typically used in process costing systems rather than job-order costing systems.

Question 5

The use of raw materials in production is:

Accepted Answer

The answer of The use of raw materials in production...

Question 6

Select the incorrect statement regarding cost flows through a job-order costing system.

Accepted Answer

In a job-order costing system, costs are accumulated separately by job, not averaged for all jobs produced within a department. Therefore, statement D is incorrect.

Question 7

All of the following transactions lead to an entry on the job cost sheet except:

Accepted Answer

Indirect materials used on a job are not directly traced to a specific job and therefore are not recorded on a job cost sheet. Instead, they are part of manufacturing overhead and allocated to jobs based on a predetermined overhead rate.

Question 8

Which product costing system distributes costs evenly across total production?

Accepted Answer

Process costing system is used when producing homogenous products in large quantities, where costs are distributed evenly across the whole production process. This is because every unit of production is essentially identical, and therefore the cost per unit is the same.

Question 9

A hybrid costing system contains:

Accepted Answer

A hybrid costing system combines features from both job-order and process costing systems, making it ideal for organizations that produce a variety of products using a mix of processes. This enables the system to track costs more accurately and provides greater flexibility in determining the cost of goods sold.

Question 10

In a job-order costing system,as goods are produced,product costs (direct material,direct labor,and overhead)are accumulated in the:

Accepted Answer

In a job-order costing system, product costs are accumulated in the Work in Process Inventory account as goods are produced. This account represents the cost of raw materials, direct labor, and manufacturing overhead that have been incurred but have not yet been transferred to the finished goods inventory.

Question 11

All of the following are source documents used in job-order costing systems except:

Accepted Answer

Standard cost card is not a source document used in job-order costing systems. The other three options (time card, work ticket, and materials requisition) are commonly used source documents.

Question 12

Which of the following is incorrect regarding a job-order costing system?

Accepted Answer

Job-order costing system is used for products that are unique, customized, or produced in small batches. In contrast, process costing is used for homogenous products produced through a continuous process. Therefore, option C is incorrect.

Question 13

The source document used to record the amount of time worked by an employee on a job is called the:

Accepted Answer

A work ticket is used to record the amount of time worked by an employee on a job. It contains details such as the task performed, time in and out, and materials used. It serves as a record of the work completed and is used for tracking job costs and calculating employee wages. Requisition sheet is used to request materials, supplies, or services. Pay stub is a document that shows an employee's earnings and deductions. Job cost sheet is used to record costs associated with a specific job.

Question 14

A process costing system is used when:

Accepted Answer

A process costing system is used when homogeneous items are produced in a continuous-flow production process. This production process involves treating each unit of output as identical to the others, and therefore it is necessary to track costs to determine the cost per unit. This is best achieved through the use of process costing, which allocates costs over a specific period of time to each unit of output. B and C are incorrect because batch production and unique, one-of-a-kind items production are best suited to a job order costing system.

Question 15

Select the incorrect statement regarding cost flows through a process costing system.

Accepted Answer

Product costs are not accumulated separately by job in a process costing system. Instead, they are accumulated by process or department.

Question 16

The application of estimated manufacturing overhead to jobs is:

Accepted Answer

The answer of The application of estimated manufacturing overhead to...

Question 17

In which of the following industries would a job-order costing system most likely be used?

Accepted Answer

A job-order costing system is mainly used in situations where companies or industries produce unique customized products such as construction of cell towers where each project requires unique resources to generate a product. In contrast, oil refineries, small appliances manufacturers, and beverage manufacturers usually involve uniform mass production.

Question 18

All of the following are asset exchange events except:

Accepted Answer

Cost of shipping goods to customers is not an asset exchange event because it does not involve the transfer of an asset. It is an expense incurred in the process of delivering goods to customers. The other options involve the exchange of assets, such as cash and raw materials, or the payment of wages for the production of goods.

Question 19

A materials requisition in a job-order costing system is used as a:

Accepted Answer

A materials requisition in a job-order costing system is primarily used as a request form for getting the necessary materials from the materials storeroom to be used on a specific job.

Question 20

A process costing system would be appropriate for all of the following except:

Accepted Answer

A process costing system is used to track costs for products or services that are produced in large quantities, over a continuous period of time, and where the production process is uniform or standardized. Gasoline, smartphones, and granola bars all involve a standardized production process with a large volume of output, making them suitable for process costing. However, services provided by a public accounting firm typically involve customized work for each client and do not involve a standardized production process, making them unsuitable for process costing.

Quiz 12: Job-Order, process, and Hybrid Costing Systems