Question 1

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

Job-order cost systems are used for heterogeneous products that are produced in batches or individual jobs. A process cost system would be used for homogenous products that are produced through a continuous process.

Question 2

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

A process cost system is specifically designed for homogenous items produced in a continuous flow, such as in a chemical plant or food production facility. Therefore, options B and C are not appropriate choices for a process cost system. Option D is incorrect because "All of these" includes options B and C, which are not appropriate for a process cost system.

Question 3

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

A job-order cost system is used in industries where unique products or projects are produced or performed. Construction of cell towers would require specific materials and labor for each tower, making it a good fit for a job-order cost system. Options A, B, and D involve more standard or repetitive processes that may be better suited for a process costing system.

Question 4

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

A materials requisition is used to request necessary materials from the materials store room for a specific job. It is not used for assigning costs to departments or ordering materials from outside suppliers, and while it does record the materials used on each job, it is not a subsidiary account.

Question 5

In a job-order cost system, the subsidiary accounts for the Work 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

Job cost sheets are the subsidiary accounts for the Work in Process Inventory account in a job-order cost system. Job cost sheets document the direct materials, direct labor, and manufacturing overhead costs for each specific job or order being produced.

Question 6

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

Costs are not averaged for all jobs produced within a department in a job-order cost system. Instead, each job is assigned the actual costs it incurred.

Question 7

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

A hybrid cost system contains both features of a job-order cost system and a process cost system. This means that the system can track costs for individual jobs or batch orders while also calculating costs for a continuous production process. This allows for a more flexible and efficient cost tracking system that can adapt to different production methods within the same organization.

Question 8

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 answer of The use of raw materials in production...

Question 9

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 10

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

Indirect materials used on a job are not directly traced to a specific job and therefore are not recorded on a job cost sheet. Instead, they are part of manufacturing overhead and allocated to jobs based on a predetermined overhead rate.

Question 11

Which of the following accounts is reported on the balance sheet?
A)Raw Materials Inventory.
B)Work in Process Inventory.
C)Finished Goods Inventory.
D)All of these.

Accepted Answer

All of these accounts are reported on the balance sheet as asset accounts to show the inventory value at each stage of production. Raw Materials Inventory shows the cost of materials available but not yet used in production, Work in Process Inventory shows the cost of partially completed goods, and Finished Goods Inventory shows the cost of completed goods that are ready for sale.

Question 12

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

In a process cost system, product costs are accumulated by department or process, not by job. The other statements are correct.

Question 13

At the time indirect materials are issued to production, the balance in the:
A)Manufacturing Overhead account will decrease.
B)Work in Process Inventory account will increase.
C)Raw Materials inventory account will increase.
D)Manufacturing Overhead account will increase.

Accepted Answer

The answer of At the time indirect materials are issued...

Question 14

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 Process Inventory account.
B)Raw Materials Inventory account.
C)Finished Goods Inventory account.
D)Cost of Goods Sold account.

Accepted Answer

In a job-order cost system, product costs are accumulated in the Work in Process Inventory account as goods are produced. This account reflects the costs of direct material, direct labor, and overhead that have been incurred but not yet transferred to finished goods.

Question 15

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

Standard cost card is not a source document used in job order cost systems. The other options (time card, work ticket, materials requisition) all provide information on the costs associated with completing a specific job or production order.

Question 16

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

A work ticket is typically used to document the amount of time an employee spends on a particular job. It includes information such as the job name, task description, employee name, date, and hours worked. The work ticket serves as the source document for recording time and forms the basis for calculating the total labor cost for a job. Requisition sheets are used to request materials or supplies for a job, pay stubs document an employee's pay and deductions, and job cost sheets track the total cost of a project including labor, materials, and overhead.

Question 17

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

The process cost system is designed to distribute costs evenly across total production, making it the best choice for this question. Job order cost system and standard cost system allocate costs based on the specific job or product, while the variable cost system focuses on the variable costs associated with producing a product or service.

Question 18

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

Asset exchange events involve the transfer of one asset for another asset. Purchasing raw materials with cash (A) and paying production wages (D) involve the exchange of cash assets for goods or services, while using raw materials in production (B) involves the exchange of one type of inventory asset for a different type of inventory asset. Cost of shipping goods to customers (C) is an expense event, not an asset exchange event, as it involves the transfer of cash assets for a service expense.

Question 19

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 answer of The application of estimated manufacturing overhead to...

Question 20

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

A process cost system is suitable for industries that produce homogenous products through a series of continuous processes. Therefore, it is not suitable for service industries like public accounting firms that provide customized services to clients. Granola bar manufacturing and gasoline production are examples of industries that can benefit from a process cost system as they involve a continuous process of production. Smart phone manufacturing may also use a process cost system, but it can also involve more customized and complex production processes, and therefore may require a different costing system.

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

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

A process cost system is used when:

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

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

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

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

A hybrid cost system contains:

The use of raw materials in production is:

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

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

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

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:

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 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:

Which product costing system distributes costs evenly across total production?

All of the following are asset exchange events except:

The application of estimated manufacturing overhead to jobs is:

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