Question 1

A job cost sheet is useful for developing financial accounting numbers but does not contain information that is useful for managing the manufacturing process.

Accepted Answer

A) True 
 B)False  False

Question 2

A manufacturing firm that produces large numbers of standardized units would normally use a job order cost accounting system.

Accepted Answer

A) True 
 B)False  False

Question 3

Large aircraft manufacturers such as McDonnell Douglas normally use:

Accepted Answer

A)  Job order costing. 
B)  Process costing. 
C)  Mixed costing. 
D)  Full costing. 
E)  Simple costing. 
A)  Job order costing. 
B)  Process costing. 
C)  Mixed costing. 
D)  Full costing. 
E)  Simple costing. A

Question 4

Canberra Company uses a job order cost accounting system.During the current month,the factory payroll of $180,000 was paid in cash.The amount of labor classified as direct labor was three times greater than the amount classified as indirect labor.What amount should be debited to Factory Overhead for indirect labor for this month?

Accepted Answer

A)  $135,000 
B)  $180,000 
C)  $45,000 
D)  $60,000 
E)  $20,000 
A)  $135,000 
B)  $180,000 
C)  $45,000 
D)  $60,000 
E)  $20,000

Question 5

The ending inventory of finished goods has a total cost of $10,000 and consists of 500 units.If the overhead applied to these goods is $2,000,and the overhead rate is 50% of direct labor,how much direct materials cost was incurred in producing these units?

Accepted Answer

A)  $4,000 
B)  $6,000 
C)  $3,000 
D)  $7,000 
E)  $10,000 
A)  $4,000 
B)  $6,000 
C)  $3,000 
D)  $7,000 
E)  $10,000

Question 6

Austin Company uses a job order cost accounting system.The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour)and that factory overhead would be $1,500,000 for the current period.At the end of the period,the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs.Using direct labor hours as a base,what was the predetermined overhead allocation rate?

Accepted Answer

A)  $6.00 per direct labor hour. 
B)  $7.50 per direct labor hour. 
C)  $6.67 per direct labor hour. 
D)  $8.33 per direct labor hour. 
E)  $7.08 per direct labor hour. 
A)  $6.00 per direct labor hour. 
B)  $7.50 per direct labor hour. 
C)  $6.67 per direct labor hour. 
D)  $8.33 per direct labor hour. 
E)  $7.08 per direct labor hour.

Question 7

Any material amount of under- or overapplied factory overhead must always be closed to Cost of Goods Sold at the end of an accounting period.

Accepted Answer

A) True 
 B)False

Question 8

A source document that production managers use to request materials for manufacturing and that is used to assign materials costs to specific jobs or to overhead is a:

Accepted Answer

A)  Job cost sheet. 
B)  Production order. 
C)  Materials requisition. 
D)  Materials purchase order. 
E)  Receiving report. 
A)  Job cost sheet. 
B)  Production order. 
C)  Materials requisition. 
D)  Materials purchase order. 
E)  Receiving report.

Question 9

When factory payroll is assigned to specific jobs,______________________ is debited.

Accepted Answer

Goods in P

Question 10

In a job order cost accounting system,raw materials requisitioned as direct materials are debited to ______________________; indirect materials are debited to ___________________.

Accepted Answer

Goods in P

Question 11

The following calendar year information about the Tahoma Corporation is available on December 31:
 $$\begin{array} { l r } 
\text { Advertising expense } & \$ 28,800 \
\text { Depreciation of factory equipment } & 42,320 \
\text { Depreciation of office equipment } & 10,800 \
\text { Direct labor } & 142,600 \
\text { Factory utilities } & 35,650 \
\text { Interest expense } & 6,650 \
\text { Inventories, January 1: } & \
\text { Raw materials } & 3,450 \
\text { Goods in process } & 17,250 \
\text { Finished goods } & 35,650 \
\text { Invertories, December } 31 : & \
\text { Raw materials } & 2,300 \
\text { Goods in process } & 20,700 \
\text { Finished goods } & 31,050 \
\text { Raw materials purchases } & 132,450 \
\text { Rent on factory building } & 41,400 \
\text { Indirect labor } & 51,750 \
\text { Sales comrnissions } & 16,500
\end{array}$$ 
The company applies overhead on the basis of 125% of direct labor costs.Calculate the amount of over- or underapplied overhead.

Accepted Answer

None

Question 12

A materials requisition is a source document used by materials managers of a manufacturing company to order raw materials from suppliers; it serves the same purpose as a purchase order in a merchandising company.

Accepted Answer

A) True 
 B)False

Question 13

The rate established prior to the beginning of a period that relates estimated overhead to an allocation factor such as estimated direct labor and that is used to assign overhead cost to jobs is the:

Accepted Answer

A)  Predetermined overhead allocation rate. 
B)  Overhead variance rate. 
C)  Estimated labor cost rate. 
D)  Chargeable overhead rate. 
E)  Miscellaneous overhead rate. 
A)  Predetermined overhead allocation rate. 
B)  Overhead variance rate. 
C)  Estimated labor cost rate. 
D)  Chargeable overhead rate. 
E)  Miscellaneous overhead rate.

Question 14

A clock card is a source document used by an employee to record the total number of hours worked during the pay period.

Accepted Answer

A) True 
 B)False

Question 15

Austin Company uses a job order cost accounting system.The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour)and that factory overhead would be $1,500,000 for the current period.At the end of the period,the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs.Using direct labor hours as the allocation base,calculate the under- or overapplied overhead for the period.

Accepted Answer

A)  $150,000 overapplied. 
B)  $150,000 underapplied. 
C)  $300,000 underapplied. 
D)  $300,000 overapplied. 
E)  $200,000 underapplied. 
A)  $150,000 overapplied. 
B)  $150,000 underapplied. 
C)  $300,000 underapplied. 
D)  $300,000 overapplied. 
E)  $200,000 underapplied.

Question 16

When raw materials are used in production and are recorded in a job cost system:

Accepted Answer

A)  Goods in Process is credited and Finished Goods is debited. 
B)  Direct Material and Indirect Material are debited and Goods in Process is credited. 
C)  Direct Material and Indirect Material are debited and Raw Materials Inventory is credited. 
D)  Goods in Process is debited and Raw Materials Inventory is credited. 
E)  Goods in Process and Factory Overhead are debited and Raw Materials Inventory is credited. 
A)  Goods in Process is credited and Finished Goods is debited. 
B)  Direct Material and Indirect Material are debited and Goods in Process is credited. 
C)  Direct Material and Indirect Material are debited and Raw Materials Inventory is credited. 
D)  Goods in Process is debited and Raw Materials Inventory is credited. 
E)  Goods in Process and Factory Overhead are debited and Raw Materials Inventory is credited.

Question 17

Selwyn's Service applied overhead on the basis of direct labor costs during the current year.Overhead applied was $16,500.Actual overhead incurred was $17,200.
A. Prepare a journal entry to remove this difference assuming that it is not material.
B. Instead, assume actual overhead incurred was only $24,000. Describe (without computations) the alternative procedure that Selwyn might use to record this material difference.

Accepted Answer

A.
 B.Since the $7,500 differe

Question 18

Medlar Corp.maintains a Web-based general ledger.Overhead is applied on the basis of direct labor costs.Its bookkeeper accidentally deleted most of the entries that had been recorded for January.A printout of the general ledger (in T-account form)showed the following:

A review of the prior year's financial statements,the current year's budget,and January's source documents produced the following information:
(1) Accounts Payable are used for raw material purchases only.January purchases were $49,000.
(2) Factory overhead costs for January were $17,000 none of which is indirect materials.
(3) The January 1 balance for finished goods inventory was $10,000.
(4) There was a single job in process at January 31 with a cost of $2,000 for direct materials and $1,500 for direct labor.
(5) Total cost of goods manufactured for January was $90,000.
(6) All direct laborers earn the same rate ($13/hour).During January,2,500 direct labor hours were worked.
(7) The predetermined overhead allocation rate is based on direct labor costs.Budgeted (expected)overhead for the year is $195,000 and budgeted (expected)direct labor is $390,000.
Write in the missing amounts (a)through (o)in the T-accounts above.

Accepted Answer

(1) Purchases of $49,000: debit of $49

Question 19

Job cost sheets are used to track all of the costs assigned to a job,including direct materials,direct labor,overhead,and all selling and administrative costs.

Accepted Answer

A) True 
 B)False

Question 20

What is a cost accounting system? What are the two basic types of cost accounting systems?

Accepted Answer

A cost accounting system is an accountin

Exam 15: Job Order Costing and Analysis

A job cost sheet is useful for developing financial accounting numbers but does not contain information that is useful for managing the manufacturing process.

A manufacturing firm that produces large numbers of standardized units would normally use a job order cost accounting system.

Large aircraft manufacturers such as McDonnell Douglas normally use:

The ending inventory of finished goods has a total cost of $10,000 and consists of 500 units.If the overhead applied to these goods is $2,000,and the overhead rate is 50% of direct labor,how much direct materials cost was incurred in producing these units?

Any material amount of under- or overapplied factory overhead must always be closed to Cost of Goods Sold at the end of an accounting period.

A source document that production managers use to request materials for manufacturing and that is used to assign materials costs to specific jobs or to overhead is a:

When factory payroll is assigned to specific jobs,______________________ is debited.

In a job order cost accounting system,raw materials requisitioned as direct materials are debited to ______________________; indirect materials are debited to ___________________.

A materials requisition is a source document used by materials managers of a manufacturing company to order raw materials from suppliers; it serves the same purpose as a purchase order in a merchandising company.

The rate established prior to the beginning of a period that relates estimated overhead to an allocation factor such as estimated direct labor and that is used to assign overhead cost to jobs is the:

A clock card is a source document used by an employee to record the total number of hours worked during the pay period.

When raw materials are used in production and are recorded in a job cost system:

Job cost sheets are used to track all of the costs assigned to a job,including direct materials,direct labor,overhead,and all selling and administrative costs.

What is a cost accounting system? What are the two basic types of cost accounting systems?

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Process Costing

Activity-Based Costing and Analysis

Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Decentralization and Performance Measurement

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Accounting With Special Journals

Time Value of Money

Investments and International Operations

Accounting for Partnerships

Filters

In a job order cost accounting system,raw materials requisitioned as direct materials are debited to ____; indirect materials are debited to _.