Question 1

If applied overhead exceeds actual overhead,cost of goods sold must be reduced by the amount of the overcharge in a job order costing system.

Accepted Answer

The answer of If applied overhead exceeds actual overhead,cost of...

Question 2

Regardless of the cost accounting system used,when the products are completed,they are transferred from work in process inventory to finished goods inventory.

Accepted Answer

This transfer of completed products from work in process inventory to finished goods inventory is a standard procedure in all cost accounting systems.

Question 3

After a job is completed,the product unit cost can be determined from the job order cost card.

Accepted Answer

The job order cost card includes all the costs incurred for a particular job, including direct materials, direct labor, and manufacturing overhead. Dividing the total cost by the number of units produced gives the unit cost of the product. Therefore, the statement is true.

Question 4

The type of product costing system used by a company is dictated by the

Accepted Answer

The type of product costing system used by a company is dictated by the production process, as different production methods require different costing methods. The project manager, company president, and plant supervisor may have input in the decision-making process, but ultimately it is the production process that determines the type of costing system used.

Question 5

When the amount of overhead applied differs from actual,the dollar amount it is usually written off to

Accepted Answer

When the overhead applied differs from actual, it means that the cost of goods sold will not accurately reflect the true cost of producing the goods. Therefore, the difference between applied and actual overhead is written off to Cost of Goods Sold.

Question 6

Which of the following is not an objective of product costing systems?

Accepted Answer

Product costing systems provide information for cost planning, assist in the preparation of the income statement, and provide information for product pricing. However, determining the optimal amount of products to manufacture is not an objective of product costing systems. That falls under production planning and control.

Question 7

Product costs appear on the income statement in the form of

Accepted Answer

Product costs include the expenses incurred in acquiring or producing goods that are sold to customers, and are typically recognized on the income statement as cost of goods sold. Materials inventory represents the cost of the raw materials that have not yet been used in production and is therefore not recognized as an expense on the income statement until the products are sold. Sales commissions are a selling expense and would be recognized separately on the income statement.

Question 8

A zero balance in Finished Goods Inventory at the start of the period means all previously completed products have been shipped.

Accepted Answer

A zero balance in Finished Goods Inventory means that all products that were completed in the previous period have been sold or shipped out.

Question 9

Which of the following is not a characteristic of a job order costing system?

Accepted Answer

The answer of Which of the following is not a...

Question 10

Job costs in a service organization end up in the Finished Goods Inventory account when a job is completed.

Accepted Answer

Job costs in a service organization do not end up in Finished Goods Inventory account as they do not produce tangible goods. Job costs in a service organization are recorded in a Work-in-Process Inventory account and then transferred to the Cost of Services Sold account when the job is completed.

Question 11

Accounting for the incurrence of __________ does not change significantly between job order costing and process costing.

Accepted Answer

The answer of Accounting for the incurrence of __________ does...

Question 12

Which of the following products probably would be manufactured using a job order costing system?

Accepted Answer

The answer of Which of the following products probably would...

Question 13

The flow of costs into a Work in Process Inventory account is very similar for job order and process costing systems.

Accepted Answer

Both job order and process costing systems involve accumulating direct materials, direct labor, and manufacturing overhead costs in a Work in Process Inventory account as production occurs. The main difference is in how the costs are traced or allocated to individual units of product. Job order costing assigns costs to specific jobs or batches of customized products, while process costing assigns costs to each unit of product produced in a continuous, repetitive production process.

Question 14

In a job order costing system,a separate job order cost card is used for each individual job.

Accepted Answer

In a job order costing system, a separate job order cost card or sheet is used for each individual job to record the direct materials, direct labor, and manufacturing overhead costs incurred for that particular job. This helps in tracking the costs and profitability of each job separately.

Question 15

Which of the following accurately describes a difference between job order and process costing systems?

Accepted Answer

In job order costing systems, costs are traced to individual jobs or orders, while in process costing systems, costs are traced to processes, departments or work cells. Option A is incorrect because overhead costs are treated as product costs in both job order and process costing systems. Option B is incorrect because both job order costing and process costing systems assign costs to production. Option D is incorrect because selling costs are always treated as period costs in both job order and process costing systems.

Question 16

A job order cost card is a type of subsidiary ledger.

Accepted Answer

A job order cost card is a record used in job order costing to accumulate the costs associated with a specific job. It is a type of subsidiary ledger that keeps track of the direct materials, direct labor, and manufacturing overhead costs incurred for each job.

Question 17

In a service organization using a job order costing system,actual overhead will be the same as applied overhead.

Accepted Answer

In a job order costing system, actual overhead can differ from applied overhead due to factors such as under or overestimating the amount of overhead needed for a particular job, or unexpected changes in the cost of overhead items such as utilities or rent. This difference is typically adjusted for at the end of the accounting period through a process called overhead variances.

Question 18

To prepare financial statements at the end of the accounting period,the actual overhead cost for the period and the estimated overhead that was applied during the period must be reconciled in a job order costing system.

Accepted Answer

This is true because reconciling the actual and estimated overhead costs is necessary to determine the accuracy of the overhead applied to production during the period and to adjust for any over- or under-applied overhead. This is important for accurate financial reporting.

Question 19

In cost-plus contracts,the "plus" is the sales price.

Accepted Answer

The answer of In cost-plus contracts,the "plus" is the sales...

Question 20

The ending balance in the Work in Process Inventory account is supported by individual Overhead account balances.

Accepted Answer

The answer of The ending balance in the Work in...

Quiz 17: Costing Systems- Job Order Costing