Question 1

The application of estimated manufacturing overhead to jobs is:
A) An asset exchange transaction.
B) An asset source transaction.
C) An asset use transaction.
D) A claims exchange transaction.

Accepted Answer

The application of estimated manufacturing overhead to jobs increases the asset account Work in Process Inventory and decreases the temporary asset account Manufacturing Overhead.As such,it is an asset exchange transaction.

Question 2

A hybrid cost system contains:
A) Features of a job-order cost system.
B) Features of a process cost system.
C) Features of both variable and absorption cost systems.
D) Features of both job-order and process cost systems.

Accepted Answer

Many companies use hybrid costing systems.Hybrid systems combine features of both process and job-order costing systems.

Question 3

All of the following are source documents used in job order cost systems except:
A) Time card.
B) Standard cost card.
C) Work ticket.
D) Materials requisition.

Accepted Answer

As each job moves through production,detailed cost information is recorded on the job cost sheet.That information includes the direct materials (from materials requisition forms),direct labor (from work tickets,which are also called time cards),and overhead (applied using the predetermined overhead rate)relating to the job.

Question 4

The source document used to record the amount of time worked by an employee on a job is called the:
A) Requisition sheet.
B) Pay stub.
C) Job cost sheet.
D) Work ticket.

Accepted Answer

The work ticket,sometimes called a time card,provides space for the job number,employee identification,and work description.Employees record on the work ticket the amount of time they spend on each job.

Question 5

All of the following transactions lead to an entry on the job cost sheet except:
A) Indirect material used on the job.
B) A materials requisition for material used on a job.
C) Work ticket for direct labor incurred on the job.
D) Application of estimated overhead to the job.

Accepted Answer

It is either not possible or not cost-effective to trace costs of indirect materials,indirect labor,utilities,rent,and depreciation directly to particular jobs.Companies normally record these costs (in the Manufacturing Overhead account)and allocate them to individual products using a predetermined overhead rate.Indirect costs are not recorded on the job cost sheet;instead,the job cost sheet provides space for applied overhead.

Question 6

In a job-order cost system,the subsidiary accounts for the work in processWork in Process Inventory account are the:
A) Standard cost cards.
B) Job cost sheets.
C) Individual accounts payable accounts.
D) Cost of production report.

Accepted Answer

The Work in Process Inventory account is a control account supported by numerous subsidiary accounts (the records for individual jobs).

Question 7

Which of the following accounts is reported on the balance sheet?
A) Raw materials inventoryRaw Materials Inventory.
B) Work in Pprocess Iinventory.
C) Finished Ggoods Iinventory.
D) All of these.

Accepted Answer

The Raw Materials Inventory,Work in Process Inventory,and Finished Goods Inventory accounts are assets accounts and,as such are reported on the balance sheet.

Question 8

Select the incorrect statement regarding cost flows through a job-order cost system.
A) Product costs are accumulated separately by job.
B) The job order cost system is patterned after the physical flow of products as they move through the production process.
C) The three inventory accounts used are maintained on a perpetual basis.
D) Costs are averaged for all jobs produced within a department.

Accepted Answer

Process costing systems provide average product costs within a department.

Question 9

A process cost system would be appropriate for all of the following except:
A) Production of gasoline.
B) Manufacture of smart phones.
C) Services provided by public accounting firm.
D) Manufacture of granola bars.

Accepted Answer

Companies that use process costing systems normally make products in mass quantities using continuous processes.

Question 10

In which of the following industries would a job-order cost system most likely be used?
A) Oil refinery
B) Small appliances manufacturer
C) Construction of cell towers
D) Beverage manufacturer

Accepted Answer

Companies use job-order costing systems when they need to know the costs of individual products,such as cell phone towers,or batches of products.

Question 11

An example of a product or /service that would most likely be accounted for using a process cost system would be:
A) Vitamin manufacturer.
B) Printing services.
C) Manufacturer of motor homes.
D) Auto repair services.

Accepted Answer

Companies that use process costing systems normally make products in mass quantities using continuous processes.Companies use job-order costing systems when they need to know the costs of individual products or services or batches of products or services.

Question 12

In a job-order cost system,as goods are produced,product costs (direct material,direct labor,and overhead)are accumulated in the:
A) Work in Pprocess Inventory account.
B) Raw Materials Inventory account.
C) Finished Ggoods Inventory account.
D) Cost of Ggoods Ssold account.

Accepted Answer

The costs of each job are accumulated in the Work in Process Inventory account..those costs are transferred to the Finished Goods Inventory account and finally to the Cost of Goods Sold account as the job is completed and then sold.

Question 13

All of the following are asset exchange events except:
A) Purchase of raw materials with cash.
B) Use of raw materials in production.
C) Cost of shipping goods to customers.
D) Payment of production wages.

Accepted Answer

Job-order and process costing systems represent the two primary methods of accounting for product cost flows in manufacturing companies.Asset exchanges include the purchase of raw materials with cash (which decreases the asset account Cash and increases the asset account Raw Materials Inventory),use of raw materials in production (which increases the asset account Work in Process Inventory and decreases the asset account Raw Materials Inventory),and the payment of production wages (which decreases the asset account Cash and increases the asset account Work in Process Inventory).Since it is a cost that is incurred after the products are complete and ready for sale,the cost incurred to ship goods to customers is classified as a selling and administrative expense,which is a period cost reported on the income statement.

Question 14

The use of raw materials in production is:
A) An asset source transaction.
B) An asset use transaction.
C) An asset exchange transaction.
D) A claims exchange transaction.

Accepted Answer

The use of raw materials in production increases the asset account Work in Process Inventory and decreases the asset account Raw Materials Inventory.As such,it is an asset exchange transaction.

Question 15

A materials requisition in a job-order cost system is used as a:
A) A source document for assigning costs to individual departments.
B) A subsidiary account for recording the materials used on each job.
C) Request form for getting the necessary materials from the materials store room.
D) A means of ordering materials from outside suppliers.

Accepted Answer

Before starting a job,the job supervisor prepares a materials requisition form which lists the materials needed to begin work.The materials requisition represents the authorization for raw materials to be released from storage to production.

Question 16

Select the incorrect statement regarding cost flows through a process cost system.
A) The process cost system is patterned after the physical flow of products as they move through the production process.
B) The three inventory accounts used are maintained on a perpetual basis.
C) Product costs are accumulated separately by job.
D) A separate work in process account is maintained for each department or process.

Accepted Answer

Companies use job-order costing systems when they need to know the costs of individual products or batches of products.In other words,a job-order costing system accumulates product costs for each individual job.

Question 17

At the time indirect materials are issued to production,the balance in the:
A) The balance in the manufacturing overheadManufacturing Overhead account will decrease.
B) The balance in the work in process inventoryWork in Process Inventory account will increase.
C) The balance in the raw materials inventoryRaw Materials inventory account will increase.
D) The balance in the manufacturing overheadManufacturing Overhead account will increase.

Accepted Answer

When a company uses production supplies,which are indirect materials,the asset account Production Supplies decreases and the temporary asset account Manufacturing Overhead increases.This event is an asset exchange transaction.

Question 18

Which product costing system distributes costs evenly across total production?
A) Process cost system
B) Job order cost system
C) Standard cost system
D) Variable cost system

Accepted Answer

Process costing systems allocate costs evenly to homogeneous products.Companies that use process costing systems normally make products in mass quantities using continuous processes.The per-unit product cost is determined by dividing the total product cost by the number of units produced during the accounting period.Process costing systems provide average product costs.

Question 19

Which of the following is incorrect regarding a job-order cost system?
A) Unit cost is determined for each product or job.
B) Source documents are used to assign costs to the subsidiary accounts.
C) Costs are accumulated for homogenous products that are produced through a continuous process.
D) Costs may be accumulated for a batch of work that contains many units of a product.

Accepted Answer

Process costing systems allocate costs evenly to homogeneous products.

Question 20

A process cost system is used when:
A) Homogenous items are produced in a continuous flow production process.
B) Batches of identical inventory items are produced.
C) A company produces unique,one-of-a-kind inventory items.
D) All of these.

Accepted Answer

Process costing systems allocate costs evenly to homogeneous products.Companies that use process costing systems normally make products in mass quantities using continuous processes.

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

The application of estimated manufacturing overhead to jobs is:

A hybrid cost system contains:

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

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

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

In a job-order cost system,the subsidiary accounts for the work in processWork in Process Inventory account are the:

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

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

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

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

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

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

All of the following are asset exchange events except:

The use of raw materials in production is:

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

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

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

Which product costing system distributes costs evenly across total production?

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

A process cost system is used when: