Question 1

In a job order cost accounting system, the entry to record the flow of direct materials into production is

Accepted Answer

In a job order cost accounting system, when direct materials are issued to production, the Work in Process account is debited to reflect the increase in production costs, and the Materials account is credited to show the reduction in inventory.

Question 2

Which of the following is a period cost?

Accepted Answer

A period cost is a cost that is not directly related to the production of goods. The salary of a telephone receptionist in the sales office is an example of a period cost as it is not directly related to the production of goods, but rather the administrative and selling functions of the business. The other options are all examples of product costs, as they are directly related to the production of goods. Depreciation on factory lunchroom furniture, salary of a security guard for the factory parking lot, and computer chips used by a computer manufacturer are all necessary expenses within the production process.

Question 3

Which of the following is a product cost?

Accepted Answer

Product costs are costs associated with creating and producing a good or service, and drill bits used in the plant assembly area are directly related to the production process.

Question 4

The Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine hours.Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours.The predetermined overhead rate based on machine hours is

Accepted Answer

The predetermined overhead rate formula is:

Predetermined overhead rate = Estimated total overhead cost / Estimated total machine hours

Using the information given in the question:

Predetermined overhead rate = $15,500,000 / 250,000 = $62 per machine hour

Since the predetermined overhead rate is based on estimated total overhead and estimated total machine hours, the actual overhead and machine hours for the year do not affect the predetermined overhead rate. Therefore, the answer is B, $62 per machine hour.

Question 5

Each document in the cost ledger is called a

Accepted Answer

A job cost sheet is a document in the cost ledger that tracks the costs associated with a specific job or project. It includes information such as materials used, labor hours worked, and overhead expenses. The other options listed (finished goods sheet, stock record, and materials requisition) do not typically refer to documents in the cost ledger.

Question 6

The amount of time spent by an employee in the factory is usually recorded on

Accepted Answer

Time spent by an employee in the factory is usually tracked and recorded on time tickets. These time tickets may be used to calculate an employee's pay or to determine how much time is spent on a particular job or project. Therefore, time tickets are the most appropriate choice for recording the amount of time spent by an employee in the factory.

Question 7

The entry to record the flow of direct labor costs into production in a job order cost accounting system is

Accepted Answer

Direct labor costs are a part of conversion costs and are directly attributed to the specific job. Therefore, the entry to record direct labor costs into production is to debit Work in Process (specific job) and credit Wages Payable. Choice A and D are incorrect as Factory Overhead is not relevant to the recording of direct labor costs. Choice B is incorrect as Finished Goods is not relevant to the recording of direct labor costs, and Wages Payable represents the liability to pay employees and is not related to the recording of direct labor costs in production.

Question 8

Which of the following would record the labor costs to an individual job?

Accepted Answer

Time tickets are used to record the actual time spent by an employee on a particular job or order, and are used as a basis for calculating the labor cost for that job. Clock cards and in-and-out cards may record an employee's attendance and departure time, but they do not necessarily tie that time to a specific job or project. A payroll register is used to summarize payroll data and is not specific to individual jobs.

Question 9

The amount of time spent by an employee on an individual job are recorded on

Accepted Answer

Time tickets are specifically designed to record the amount of time spent by an employee on an individual job. Pay stubs and employees' earnings records generally include information about the employee's salary or wages and do not include detailed information about individual jobs. In-and-out cards may record the time an employee clocks in and out of work, but do not necessarily track time spent on individual jobs.

Question 10

A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of the materials from the controlling account in the general ledger to the controlling accounts for

Accepted Answer

The transfer of cost of materials from the controlling account in the general ledger is typically allocated to the Work in Process and Factory Overhead accounts. This reflects the direct and indirect costs associated with production. The other options (A, C, and D) do not reflect this allocation correctly.

Question 11

The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 with 300,000 total machine hours.Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours.If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time year to date, the overhead is

Accepted Answer

The answer of The Thomlin Company forecasts that total overhead...

Question 12

The source document for the data for debiting Work in Process for direct materials is a

Accepted Answer

The materials requisition is the source document that authorizes the release of raw materials from the storeroom to the factory floor. This document identifies the types and quantities of materials to be issued to production and is used to record the cost of materials used in production by debiting the Work in Process account.

Question 13

At the end of the year, overhead applied was $42,000,000.Actual overhead was $40,300,000.Closing over/under applied overhead into Cost of Goods Sold would cause net income to

Accepted Answer

The answer of At the end of the year, overhead...

Question 14

At the end of July, the first month of the current fiscal year, the factory overhead account had a debit balance.Which of the following describes the nature of this balance and how it would be reported on the interim balance sheet?

Accepted Answer

A debit balance in the factory overhead account at the end of the first month of the fiscal year indicates that actual overhead costs incurred were greater than the amount charged to production. This is an under applied overhead situation, which results in a deferred debit balance. Therefore, option B is the best choice.

Question 15

In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a

Accepted Answer

The receiving department personnel completes a receiving report to document the receipt of goods in a job order cost accounting system. This report includes information such as the quantity and description of the received goods, the date of receipt, the purchase order number, and any discrepancies or damages found during inspection.

Question 16

At the end of the fiscal year, the balance in Factory Overhead is small.The balance would be

Accepted Answer

If the balance in Factory Overhead is small at the end of the fiscal year, it indicates that most of the overhead costs have already been allocated to Work in Process, Finished Goods, or both. Therefore, there is no need to transfer or allocate any more overhead costs. Instead, the remaining balance can be transferred to Cost of Goods Sold, which represents the cost of goods that have been sold during the fiscal year. This will reduce the amount of inventory on hand and increase the cost of goods sold, which is desirable for tax purposes. Therefore, Choice B is the best option.

Question 17

Selected accounts with amounts omitted are as follows  If the balance of Work in Process at August 31 is $220,000, what was the amount debited to Work in Process for direct materials in August?

Accepted Answer

The answer of Selected accounts with amounts omitted are as...

Question 18

The document authorizing the issuance of materials from the storeroom is a

Accepted Answer

A materials requisition is the document that is used to request the issuance of materials from the storeroom. It specifies the type and quantity of materials needed, as well as any other relevant information such as the job or department for which they are needed. A purchase requisition, on the other hand, is used to request the purchase of materials or other goods from an external supplier. A receiving report is used to document the receipt of goods that have been ordered, while a purchase order is the document used to initiate the purchase of goods from an external supplier.

Question 19

The details concerning the costs incurred on each job order are accumulated in a work in process account and supported by a

Accepted Answer

The costs incurred on each job order are accumulated in a cost ledger which contains information related to direct materials, direct labor, and manufacturing overhead costs. The cost ledger is used to determine the total cost of each job order and the cost of goods sold at the end of the accounting period. A stock ledger is used to record information related to inventory quantities and values, a materials ledger is used to track the use of materials in production, and a creditors ledger is used to record information related to accounts payable.

Question 20

The basis for recording direct and indirect labor costs incurred is a summary of the period's

Accepted Answer

Time tickets are used to record the amount of time each employee worked on a specific job or task, which is used to determine the direct labor costs. Indirect labor costs, such as salaries of supervisors or maintenance personnel, can also be recorded on time tickets or on a separate summary of indirect labor costs. Job order cost sheets, employee earnings records, and clock cards may provide additional information, but they are not the primary basis for recording direct and indirect labor costs.

Quiz 2: Job Order Costing