Deck 27: Job Order Cost Accounting

Question 1

The manufacturing overhead recorded in the Work in Process Inventory account is the actual amount of overhead incurred.

Answer 1

False

Question 2

There may not be a raw materials inventory account when a just-in-time inventory system is used.

Answer 2

True

Question 3

At the end of each year, the underapplied or overapplied overhead is closed to the Work in Process inventory account.

Answer 3

False

Question 4

Under the LIFO method of inventory valuation, the quantities used are priced from the oldest inventory items available in the order they were received.

Question 5

Standard cost accounting may be used with either a job order cost system or a process cost system.

Question 6

The monthly total of the Overhead Applied section of all job order cost sheets should agree with the balance in the control account Manufacturing Overhead.

Question 7

The manufacturing overhead recorded in the Work in Process Inventory account is not necessarily the actual overhead incurred.

Question 8

The process cost accounting system is used when homogenous products are manufactured in a continuous process.

Question 9

There is no need to take periodic physical counts of inventory when the perpetual inventory system is used.

Question 10

The entry to charge work in process inventory with the appropriate amount of applied overhead consists of a debit to Work in Process Inventory and a credit to Manufacturing Overhead Applied.

Question 11

Indirect materials issued to production are recorded with a debit to Work in Process and a credit to Raw Materials.

Question 12

At the end of each year, the underapplied or overapplied overhead is closed out to the Cost of Goods Sold account.

Question 13

At the end of each year, the underapplied or overapplied overhead is as an adjustment to the Cost of Goods Sold account.

Question 14

When a perpetual inventory system is used, the balance of the Raw Materials Inventory account at the end of an accounting period should reflect the cost of materials on hand.

Question 15

Direct labor costs of $10,000 and indirect labor costs of $1,500 associated with a job would be recorded on the job cost sheet with a corresponding debit to Work in Process for $11,500.

Question 16

Perpetual inventory records are maintained through the use of subsidiary ledger cards or their automated equivalents.

Question 17

Purchases of raw materials are debited to the Work in Process Inventory account.

Question 18

When perpetual inventories are maintained in a job order cost system, as each job is completed its cost is transferred from Work in Process Inventory to Finished Goods Inventory.

Question 19

The cost of a unit produced in a process cost system is the sum of the costs incurred in each department divided by the number of units manufactured.

Question 20

Utilizing standard costing systems enables management to evaluate manufacturing efficiencies.

Question 21

The rate is often computed by dividing estimated overhead costs by estimated direct labor costs.

Question 22

In a just-in-time inventory system, the account is debited when goods arrive.

Question 23

The entry to record applied overhead includes a(n)to the Work in Process Inventory account.

Question 24

When a cost accounting system is used, perpetual inventory records are kept for raw materials, work in process, and .

Question 25

Under a perpetual inventory system, when goods are sold the Cost of Goods Sold account is
.

Question 26

Under a job order cost system, unit costs are determined for products manufactured under each
.

Question 27

If a firm applies its manufacturing overhead based on direct labor cost and estimates that for the coming year it will have expected total direct labor costs of $60,000 and total manufacturing overhead costs of $36,000, its overhead application rate will be 60 percent.

Question 28

Manufacturing costs for each unit produced are calculated by dividing job order costs by
.

Question 29

Idle time is generally charged to manufacturing overhead.

Question 30

In a perpetual inventory system, each inventory account is supported by a(n)ledger.

Question 31

A(n)accounting system allows a firm to compare its budgeted costs with its actual costs in order to evaluate efficiency.

Question 32

Acceptable methods for determining the cost of inventory include FIFO, LIFO, weighted average cost, specific identification and standard cost.

Question 33

At the end of the month, if the total of the credits in the Manufacturing Overhead Applied account is greater than the total of the debits in the Manufacturing Overhead account, overhead has been underapplied.

Question 34

Under a perpetual inventory system, when goods are completed the Work in Process Inventory account is .

Question 35

The entry to record applied overhead includes a(n)to Manufacturing Overhead Applied.

Question 36

and are the two principal cost accounting systems for capturing and reporting manufacturing costs.

Question 37

If actual overhead costs exceed the overhead applied during the year, the difference represents
overhead.

Question 38

A worker completes a(n)for each job indicating the job performed and the corresponding starting and stopping time.

Question 39

Indirect labor is recorded by debiting the account and crediting the Manufacturing Overhead Applied account.

Question 40

A(n)accounting system is normally used when standard types of products are made in continuous operations.

Question 41

A standard cost system may be used:

A)only with a process cost system.
B)only with a job order cost system.
C)in neither a job order cost system or a process cost system.
D)with either a job order cost system or a process cost system.

Question 42

Which of the following IS NOT a benefit of a standard cost system?

A)consistently costed products.
B)assistance in the identification of manufacturing inefficiencies.
C)provides a basis for setting selling prices.
D)reduction of the accounting workload.

Question 43

On May 5, a firm purchased 20 units of materials at a unit price of $2.20. On May 15, the firm purchased 35 units at a unit price of $2.45. If the firm uses the FIFO method of inventory pricing, the total cost of 30 units issued on May 20 would be:

A)$66.00.
B)$68.50.
C)$73.50.
D)$69.75.

Question 44

A job order cost sheet would be utilized to track the cost of the following costs except for:

A)labor hours worked.
B)material issued to the job.
C)sales commission on the job.
D)overhead allocated.

Question 45

Workers who perform direct labor prepare a series of to account for all time spent in the plant.

Question 46

When materials that will become part of a finished product are removed from the storeroom and placed in production,

A)Raw Materials Inventory is debited.
B)Manufacturing Overhead is debited.
C)Work in Process Inventory is debited.
D)Work in Process Inventory is credited.

Question 47

When perpetual inventories are maintained in a job order cost system, the balance of the Work in Process Inventory account represents:

A)the actual costs for the labor and materials used in uncompleted jobs and estimate of the overhead associated with these jobs.
B)the actual costs incurred for labor, materials, and overhead on all jobs that were started but are not yet complete.
C)only the actual costs for the labor and materials used in uncompleted jobs.
D)only the actual costs for the labor and materials used in completed jobs.

Question 48

When a perpetual inventory system is used, sales revenue is recorded as products are sold,

A)but the cost of the goods sold is not recorded.
B)and the cost of goods sold is transferred from the Cost of Goods Manufactured to the Cost of Goods Sold account.
C)and the cost of the goods sold is transferred from the Work in Process Inventory account to the Cost of Goods Sold account.
D)and the cost of the goods sold is transferred from the Finished Goods Inventory account to the Cost of Goods Sold account.

Question 49

At the end of the accounting period, the balance in the Raw Materials inventory account reflects the cost of materials:

A)on hand and available for use.
B)issued to production.
C)purchased during the period.
D)assigned to manufacturing overhead.

Question 50

The entry to record the application of overhead to jobs consists of:

A)a debit to Manufacturing Overhead Applied and a credit to Manufacturing Overhead.
B)a debit to Work in Process Inventory and a credit to Manufacturing Overhead Applied.
C)a debit to Manufacturing Overhead and a credit to Manufacturing Overhead Applied.
D)a debit to Manufacturing Overhead Applied and a credit to Work in Process Inventory.

Question 51

A job order cost sheet summarizes:

A)the direct labor, direct materials used, and actual overhead costs incurred on a specific job.
B)the estimated costs that will be required to complete a specific job.
C)the direct labor, direct materials used, and applied overhead association with a specific job.
D)the direct labor and direct materials used only.

Question 52

When indirect materials are requisitioned from the materials storeroom and placed in production, an entry is made crediting Raw Materials Inventory and debiting

A)Work in Process Inventory.
B)Cost of Goods Manufactured.
C)Manufacturing Overhead.
D)Manufacturing Overhead Applied.

Question 53

Jacson Corp. was undecided whether to use labor hours or labor cost in establishing the annual overhead rate. Labor costs are prone to fluctuate based on new hires, raises, retirements, and resignations. They decided to compute both rates for comparison. The overhead costs for the year were estimated at $525,000 with expected direct labor hours of 35,000 and indirect labor hours of 15,000. Direct and indirect labor costs are estimated to be $420,000 and $210,000 respectively. The overhead application rate for both bases (labor hours, labor cost)would be:

A)$12 per hour; 80% of labor cost.
B)$10.50 per hour; 83.3% of labor cost.
C)$15 per hour; 125% of labor cost.
D)$12.60 per hour; 120% of labor cost.

Question 54

Actual direct labor and manufacturing overhead costs for Smith Manufacturing were $65,000 and
$136,500 respectively. The estimated costs for the year were $75,000 of direct labor and $150,000 in manufacturing overhead. The over (under)applied overhead for the year was:
A)$26,500 underapplied.

A)$6,500 underapplied.
B)$6,500 overapplied.
D)$26,500 overapplied.

Question 55

At the end of the fiscal year, any immaterial overapplied or underapplied overhead is:

A)closed to the Cost of Goods Manufactured account.
B)shown on the balance sheet as either a deferred charge or a deferred credit.
C)allocated to Cost of Goods Sold, Finished Goods Inventory, and Work in Process Inventory.
D)closed to the Cost of Goods Sold account.

Question 56

Which of the following IS NOT an advantage of a just-in-time inventory system?

A)reduction in storage and warehousing cost.
B)risk of stock outs.
C)reduction in working capital requirements.
D)reduction in costs associated with recordkeeping.

Question 57

Materials may be withdrawn from the storeroom only on completion of a .

Question 58

Actual overhead costs are:

A)debited to Work in Process Inventory when incurred.
B)credited to Manufacturing Overhead when incurred.
C)debited to Manufacturing Overhead Applied when incurred.
D)debited to Manufacturing Overhead when incurred.

Question 59

At the end of the accounting period, the balance in the Work in Process inventory account reflects the cost of:

A)goods manufactured.
B)partially completed units.
C)completed units.
D)goods sold.

Question 60

Job order cost accounting is appropriate:

A)when there are continuous operations on standard types of products.
B)only for goods produced on special order.
C)when a company produces more than one product in batches rather than on a continuous basis.
D)for all manufacturing companies.

Question 61

If the manufacturing overhead was overapplied, then the:

A)manufacturing overhead account had lower total debits than manufacturing overhead applied had in total credits.
B)manufacturing overhead account had more in total debits than manufacturing overhead had in total credits.
C)actual overhead expenses were more than the amount going to Work in Process.
D)debits to Work in Process were more than the credits to Work in Process.

Question 62

On May 5, a firm purchased 20 units of materials at a unit price of $2.20. On May 15, the firm purchased 35 units at a unit price of $2.45. If the firm uses the LIFO method of inventory pricing, the total cost of 30 units issued on May 20 would be:

A)$66.00.
B)$68.50.
C)$73.50.
D)$69.75.

Question 63

Job order cost sheets constitute a subsidiary ledger that supports:

A)the Finished Goods Inventory account.
B)Work in Process Inventory account.
C)the Raw Materials Inventory account.
D)the Cost of Goods Manufactured account.

Question 64

What is the subsidiary ledger that contains a record for each overhead item called?

A)Manufacturing Overhead Control
B)Manufacturing Overhead Ledger
C)Manufacturing Overhead Records Book
D)Manufacturing Overhead Card

Question 65

Martinez Manufacturing applies overhead based on direct labor hours. The company estimates that their overhead for the year will be $180,000, and that they will use 72,000 direct labor hours. During the year, Martinez Manufacturing actually used 71,000 direct labor hours and actual overhead costs were $184,000. At the end of the year, manufacturing overhead was:

A)Overapplied by $6,500.
B)Overapplied by $4,000.
C)Underapplied by $4,000.
D)Underapplied by $6,500.

Question 66

A raw material subsidiary ledger:

A)contains a raw materials card for each item of direct materials only.
B)contains a raw materials card for each item of indirect materials only.
C)contains a raw material card for each supplier of raw materials.
D)contains a raw materials card for each item of direct materials and indirect materials.

Question 67

The total direct labor charged to all job cost sheets must agree with the direct labor debited to:

A)Time Tickets.
B)Wages Payable.
C)Wages Expense.
D)Work in Process Inventory.

Question 68

The McGreen Company employees worked 12,200 hours last year with an average hourly rate of
$13 per hour. The overhead was $793,000. If overhead is based on direct labor costs, then the overhead rate per direct labor dollar is

A)$13.00
B)$5.00
C)$65.00
D)$0.20

Question 69

Wilson Enterprises applies overhead based on direct labor cost. The company estimates that their overhead for the year will be $240,000, and direct labor cost to be $300,000. Actual direct labor cost for Martinez Manufacturing was $316,000 and actual overhead costs were $254,000. At the end of the year, manufacturing overhead was:

A)Overapplied by $1,400.
B)Underapplied by $1,400.
C)Overapplied by $1,200.
D)Underapplied by $1,200.

Question 70

The is a record of all manufacturing costs charged to a specific job.

A)Cost of Goods Sold
B)Standard Costs Card
C)Job Order Cost Sheet
D)Work in Process Inventory

Question 71

On June 1, a firm purchased 40 units of materials at a unit price of $1.42. On June 15, the firm purchased 45 units with a unit price of $1.18. If the firm uses the FIFO method of inventory pricing, the total cost of 65 units issued on June 20 would be:

A)$92.30.
B)$86.30.
C)$84.50.
D)$81.50.

Question 72

Manufacturing overhead includes all of the following except

A)indirect labor.
B)payroll taxes on factory labor.
C)factory utilities.
D)direct labor.

Question 73

Wilson Enterprises applies overhead based on direct labor cost. The company estimates that their overhead for the year will be $240,000, and direct labor cost to be $300,000. Actual direct labor cost for Martinez Manufacturing was $316,000. The journal entry to record manufacturing overhead would include a:

A)Debit to Work in Process Inventory for $316,000.
B)Credit to Manufacturing Overhead Applied for $252,800.
C)Credit to Work in Process Inventory for $252,800.
D)Credit to Manufacturing Overhead Applied for $316,000.

Question 74

At the end of the year the Manufacturing Overhead account is closed into what account?

A)Work in Process
B)Cost of Goods Sold
C)Finished Goods
D)Manufacturing Overhead Control

Question 75

Finished Goods beginning and ending balances are $23,000 and $17,000, respectively. The cost of goods manufactured for the period was $187,500. Actual manufacturing overhead for the period was $32,000 and applied overhead was $34,000. The adjusted cost of goods sold was:

A)$191,500.
B)$193.500.
C)$225,500.
D)$227,500.

Question 76

Process cost accounting is appropriate:

A)when there are continuous operations on standard types of products.
B)when a company produces more than one product in batches rather than on a continuous basis.
C)when a company produces what each customer wants on special order.
D)exclusively for companies that produce only one product.

Question 77

On June 1, a firm purchased 40 units of materials at a unit price of $1.42. On June 15, the firm purchased 45 units with a unit price of $1.18. If the firm uses the LIFO method of inventory pricing, the total cost of 65 units issued on June 20 would be:

A)$92.30.
B)$86.30.
C)$84.50.
D)$81.50.

Question 78

If manufacturing overhead is applied at a rate of $1.62 per direct labor dollar and the Department B employee worked 198 hours at $12.50 an hour on Job L1147, then the applied overhead would be

A)$2,475.00.
B)$320.76.
C)$4,009.50.
D)$12.50.

Question 79

Job Z2 requires $1,350 of material, $100 of which is indirect material. If manufacturing overhead is applied at a rate of 150% of direct labor cost and there were 232 labor hours charged to Job Z2 at $13 an hour, the total cost of Job Z2 would be:

A)$8,890.
B)$8,790.
C)$4,366.
D)$6,549.

Question 80

Martinez Manufacturing applies overhead based on direct labor hours. The company estimates that their overhead for the year will be $180,000, and that they will use 72,000 direct labor hours. Martinez Manufacturing actually used 71,000 direct labor hours. The journal entry to record manufacturing overhead would include a:

A)Debit to Work in Process Inventory for $180,000.
B)Credit to Manufacturing Overhead Applied for $180,000.
C)Debit to Work in Process Inventory for $177,500.
D)Debit to Manufacturing Overhead Applied for $177,500.