Question 1

Cost accounting systems are used ________.

Accepted Answer

Cost accounting systems are primarily used to accumulate product cost information, which helps in determining the cost of producing each product. This system is crucial for setting prices, controlling operations, and making inventory valuation decisions. Choices B, C, and D are incorrect because cost accounting systems do not typically assign period costs directly to products (these are usually treated as expenses in the period they are incurred), they are used by both manufacturing and service companies, and they are more directly used by management for internal decision-making rather than by stockholders.

Question 2

Which of the following is the correct order of the four steps of tracking product costs?

Accepted Answer

The correct order of tracking product costs is accumulate → assign → allocate → adjust. First, the direct and indirect costs are accumulated. Then, they are assigned to the products that incurred those costs. Next, the costs are allocated to the different product cost categories based on predetermined criteria. Finally, any necessary adjustments are made to ensure accuracy.

Question 3

Which of the following businesses is most likely to use a process costing system?

Accepted Answer

Process costing is a costing methodology used to determine the cost of creating a product on a large scale. It is used in industries that produce large quantities of identical products, such as candy manufacturers.

Question 4

Define a job order costing system and list two types of businesses that would use a job order costing system.

Accepted Answer

The answer of Define a job order costing system and...

Question 5

Cost accounting systems are primarily concerned with accumulating product cost information.

Accepted Answer

Cost accounting systems are designed to gather and analyze information related to the costs of producing goods or services. This information is used to make decisions related to pricing, production volume, and overall profitability. Therefore, cost accounting systems are primarily concerned with accumulating product cost information.

Question 6

Both job order and process costing systems use a four-step method to track product costs.List each of the four steps.

Accepted Answer

The answer of Both job order and process costing systems...

Question 7

A job order costing system would be appropriate for a manufacturing company that manufactures identical units through a series of uniform production steps.

Accepted Answer

A job order costing system is used when each unit produced is unique and requires different resources and production steps. For a manufacturing company that produces identical units through uniform production steps, a process costing system would be more appropriate.

Question 8

A major purpose of a cost accounting system is to

Accepted Answer

The main purpose of a cost accounting system is to calculate the cost of producing goods or services. This information is used to determine the cost of goods sold for the income statement. The other options are not primary goals of a cost accounting system.

Question 9

Accounting firms,building contractors,and healthcare providers use process costing.

Accepted Answer

Accounting firms and healthcare providers typically use job costing because their services are unique to each client. Building contractors can use either job costing for unique projects or process costing if they produce standardized products in mass quantities, but process costing is more commonly associated with manufacturing continuous goods like chemicals or food.

Question 10

A cost accounting system will assist a manager in determining how many and which products to produce.

Accepted Answer

A cost accounting system provides information on the cost of production for different products which can assist managers in making decisions on production levels and product mix.

Question 11

For each of the following types of business,indicate why the manager needs to know the unit cost information.
 $\begin{array} { | l | l | } 
\hline \text { Managers of a } & \text { Need to know the cost to } \
\hline \text { Bakery } & \
\hline \text { Computer } \
\text { manufacturer } & \
\hline \text { Bank } & \
\hline \text { Seamstress } & \
\hline
\end{array}$

Accepted Answer

The answer of For each of the following types of...

Question 12

Define a process costing system and list two types of businesses that would use a process costing system.

Accepted Answer

The answer of Define a process costing system and list...

Question 13

Which of the following would use a process costing system rather than a job order costing system?

Accepted Answer

Process costing system is used when products are manufactured in large quantities of identical units. Paint manufacturing falls under this category because it involves the production of large quantities of identical units. On the other hand, job order costing system is typically used when goods or services are produced on a customized or individualized basis, such as in home remodeling contracting companies. Therefore, choices A, B, and D would be better suited to job order costing systems.

Question 14

Which of the following companies is most likely to use process costing?

Accepted Answer

Process costing is used by industries that manufacture homogeneous products in a continuous production process. Breakfast cereal companies typically use process costing because they produce large volumes of a uniform product using a continuous production process. The other industries listed are unlikely to have a continuous production process that produces homogeneous products, and would therefore be less likely to use process costing.

Question 15

A process costing system is used when a company produces identical units through a series of production steps.

Accepted Answer

A process costing system is used to track the costs of producing identical units, which go through a series of production steps. This is different from a job costing system, which is used when the company produces unique products or services.

Question 16

Which of the following is a reason why a job order costing system is appropriate for a custom furniture manufacturer?

Accepted Answer

A job order costing system is appropriate for a custom furniture manufacturer because the cost incurred for each job will differ based on the order specifications. Since custom furniture is made to order and each order is unique, the cost of materials, labor, and overhead will vary for each job. This makes it necessary to track costs for each individual job using a job order costing system.

Question 17

A job order costing system is used by companies that manufacture batches of unique products or provide specialized services.

Accepted Answer

Job order costing is used by companies that produce custom products or provide customized services, where each job or project is unique and requires specific materials, labor, and overhead costs to be tracked and allocated to that specific job or project. In this way, the cost of each job can be accurately determined and included in the company's financial statements.

Question 18

Which of the following statements is TRUE of costing systems?

Accepted Answer

An accounting firm would likely use a job order costing system, as they typically provide customized services for each individual client, which would require tracking the costs associated with each job separately. Process costing systems are typically used by manufacturers who produce large quantities of identical products, while job order costing systems are used by companies that produce customized products or services. Therefore, choices A, B, and C are incorrect.

Question 19

The information from a cost accounting system allows managers to make decisions about planning and directing,but not about controlling.

Accepted Answer

The information from a cost accounting system allows managers to make decisions about planning, directing, and controlling. Cost accounting provides information about expenses, cost of goods sold, and profitability, which are essential for controlling the operations and making corrective actions if necessary.

Question 20

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

Accepted Answer

The answer of Which one of the following companies is...

Quiz 2: Job Order Costing