Question 1

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

Accepted Answer

A)  Vitamin manufacturer. 
B)  Printing services. 
C)  Manufacturer of motor homes. 
D)  Auto repair services. 
A)  Vitamin manufacturer. 
B)  Printing services. 
C)  Manufacturer of motor homes. 
D)  Auto repair services. A

Question 2

In a job-order costing system,a separate job cost sheet is maintained for each job in order to facilitate costing.

Accepted Answer

A) True 
 B)False  True

Question 3

The 10,000 units in Department B that are 30% complete are equivalent to 3,000 whole units.

Accepted Answer

A) True 
 B)False  True

Question 4

Recognition of revenue from sale of finished goods is:

Accepted Answer

A)  An asset use transaction. 
B)  An asset exchange transaction. 
C)  An asset source transaction. 
D)  A claims exchange transaction. 
A)  An asset use transaction. 
B)  An asset exchange transaction. 
C)  An asset source transaction. 
D)  A claims exchange transaction.

Question 5

O'Hare Company is a manufacturing firm that uses a job-order costing system to determine the costs of its products.On January 1,O'Hare purchased $3,000 of raw materials with cash.The entry to record the purchase of raw materials would:

Accepted Answer

A)  Increase total assets. 
B)  Decrease total assets. 
C)  Have no impact on total assets. 
D)  Decrease net income. 
A)  Increase total assets. 
B)  Decrease total assets. 
C)  Have no impact on total assets. 
D)  Decrease net income.

Question 6

How should a company choose between a job-order costing system and a process costing system?

Accepted Answer

This decision should be based on the nat

Question 7

Needham Company uses a job-order costing system.During the month of September,the company worked on three jobs.The job-order cost sheets for the three jobs contained the following information at the end of September: $$\begin{array} { l r r r } 
& \text { Job A } & \text { Job B } & \text { Job C } \
\text { Beginning Balances } & \$ 4,000 &\$ 3 , 0 0 0  &\$ 6 , 0 0 0 \
\text { Direct Materials } & 1,000 & 1,600 & 2,000 \
\text { Direct Labor } & 2,400 & 4,600 & 1,800
\end{array}$$
 The company applies overhead at 120% of direct labor cost.
If Job B was sold for $16,000,what was the amount of gross margin for this job? (Ignore any consideration of underapplied or overapplied overhead.)

Accepted Answer

A)  $6,800 
B)  $5,880 
C)  $1,280 
D)  $14,720 
A)  $6,800 
B)  $5,880 
C)  $1,280 
D)  $14,720

Question 8

Burton Company custom produces specialty souvenir products.During the current accounting period,the company completed the following transactions:
(a)Purchased $20,000 of raw materials,paying cash.
(b)Used direct materials in production as follows:
 $\begin{array}{|l|rr|}
\hline \text { Job Number } & \text { Direct Materials } \
\hline 1 & \$  10,000 \
\hline 2 & 5,000 \
\hline 3 & 2,000 \
\hline \text { Total } & \$ 17,000 \
\hline
\end{array}$ (c)Paid direct labor costs as follows:
 $$\begin{array} { | l | l r | } 
\hline \text { Job Number } & \text { Direct Labor } \
\hline 1 & \$  10,000 \
\hline 2 & { \$ 8, 000 } \
\hline 3 & \$ 6, 000 \
\hline \text { Total } & \$  24,000 \
\hline
\end{array}$$ (d)Paid cash for various actual factory overhead costs,$40,000.
(e)Applied factory overhead to production using a predetermined overhead rate of $1.50 per direct labor dollar.
(f)Completed Job 1.
(g)Job 1 was sold for $50,000 cash.
(h)Paid $1,000 for selling and administrative expenses.
Required:
1)Record the data in the T-accounts provided.Post costs to the job cost sheet for Job 1 as necessary.
Label the transactions (a)-(h).
   
2)For transaction (i),post the closing entry for any underapplied or overapplied overhead assuming that the amount is written off directly against cost of goods sold.
3)Prepare a schedule of cost of goods manufactured and sold assuming there were no beginning inventories.
4)Compute the amount of gross profit earned on Job 1.

Accepted Answer

1)Completed job cost sheet:
 @#IMG-DLM& 
2)Posted

Question 9

In a job-order costing system,each department has a Work in Process account.

Accepted Answer

A) True 
 B)False

Question 10

A company that uses a process costing system would calculate the cost per equivalent unit and then use that amount to allocate costs between the goods transferred out and the beginning work in process inventory.

Accepted Answer

A) True 
 B)False

Question 11

Generally accepted accounting principles (GAAP)prohibit the use of a hybrid costing system.

Accepted Answer

A) True 
 B)False

Question 12

O'Hare Company is a manufacturing firm that uses a job-order costing system to determine the costs of its products.During the current accounting period,O'Hare paid $2,100 to production employees who worked on Job #132.The entry to record these wages would include an increase to which of the following accounts?

Accepted Answer

A)  Cost of Goods Sold. 
B)  Work in Process Inventory. 
C)  Finished Goods Inventory. 
D)  Wage Expense. 
A)  Cost of Goods Sold. 
B)  Work in Process Inventory. 
C)  Finished Goods Inventory. 
D)  Wage Expense.

Question 13

Process costing systems do not distinguish the cost of one unit of product from another.

Accepted Answer

A) True 
 B)False

Question 14

During the current accounting period,O'Hare applied $14,500 of estimated overhead cost to production.Actual overhead costs were $14,325.Assuming that the balance in the Manufacturing Overhead is insignificant,the recognition of the transaction to close that account will:

Accepted Answer

A)  Decrease cost of goods sold and increase stockholders' equity. 
B)  Increase cost of goods sold. 
C)  Decrease stockholders' equity. 
D)  Decrease total assets and total liabilities. 
A)  Decrease cost of goods sold and increase stockholders' equity. 
B)  Increase cost of goods sold. 
C)  Decrease stockholders' equity. 
D)  Decrease total assets and total liabilities.

Question 15

Indicate whether each of the following statements about job-order costing systems is true or false.
A company using a job-order costing system assigns an identification number to each job or batch of products.______
With a job-order costing system,costs for all jobs worked on during a period are accumulated together and then allocated to individual jobs.______
Job-order costing systems involve some averaging in the calculation of the costs of products.______
In a job-order costing system,the Work in Process Inventory account is a temporary account.______
In a job-order costing system,each job cost sheet includes direct materials,direct labor,and manufacturing overhead cost.______

Accepted Answer

A company using a job-order costing syst

Question 16

A job's budgeted costs for materials,labor,and overhead are inserted on the job cost sheet when production is completed.

Accepted Answer

A) True 
 B)False

Question 17

The Purina Company would use a job-order costing system to account for the costs of making its premium dog food.

Accepted Answer

A) True 
 B)False

Question 18

Ling Company has two departments,Assembly and Finishing.Consider the following data for the Assembly Department:
 $\begin{array}{lllll}
 &\text { Units } & \% \text { Complete }&\text {Direct Material}&\text {Direct Labor}&\text {Overhead}&\text {Total} \
\text { Beginning } &\
\text { work in } & & & && \
\text { process } & 2,000 & 90  \%&&&&\$2,475 \
\text { Started during } & & & & \
\text { the month } & 18,000 & & & \
\text { Completed } & & & & \
\text { during the } & & & & \
\text { month } & 15,000 & & \
\text { Ending work } & & & & \
\text { in process } & 5,000 & 60 \% \
\text { Costs addled } & & & & \
\text { during month } & & &\$11,700 &\$6,750&\$4,050&\$22,500
\end{array}$
 Required:
1)Compute the number of total equivalent units for the Assembly Department.Ling uses the weighted-average method to determine equivalent units
2)Calculate the cost per equivalent unit.(Round your answer to four decimal places.)
3)Compute the amount of costs that should be transferred to the Finishing Department.(Round your answer to the nearest cent.)
4)Compute the amount of costs that should be assigned to the 3,000 units in ending inventory.(Round your answer to the nearest cent.)

Accepted Answer

1)Equivalent units = 15,000 + (5,000 × 6

Question 19

The entry to record the completion of a job in a job-order costing system would cause:

Accepted Answer

A)  An increase to the Cost of Goods Manufactured account. 
B)  An increase in net income. 
C)  An increase to the Cost of Goods Sold account. 
D)  A decrease to the Work in Process Inventory account. 
A)  An increase to the Cost of Goods Manufactured account. 
B)  An increase in net income. 
C)  An increase to the Cost of Goods Sold account. 
D)  A decrease to the Work in Process Inventory account.

Question 20

For the month of November,Department B completed and transferred to the next department 5,000 units of product.Department B's ending work in process was 3,000 units that were 10% complete.The following cost information is available for the period:
 $$\begin{array} { l r } 
\text { Cost transferred in } & \$35,000 \
\text { Cost of begirning work in process } & 3,600 \
\text { Direct materials } & 17,000 \
\text { Direct labor } & 9,000 \
\text { Marufacturing overhead } & 12,000
\end{array}$$ Required:
(A)Determine the cost per equivalent unit for the month of November using the weighted average method.(Round your answer to three decimal places.)
(B)Determine the cost transferred out during the month.
(C)Calculate the cost assigned to the ending work in process at the end of the month.(Round your answer to the nearest dollar.)

Accepted Answer

(A)Equivalent units = 5,000 + (3,000 × 1

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

In a job-order costing system,a separate job cost sheet is maintained for each job in order to facilitate costing.

The 10,000 units in Department B that are 30% complete are equivalent to 3,000 whole units.

Recognition of revenue from sale of finished goods is:

O'Hare Company is a manufacturing firm that uses a job-order costing system to determine the costs of its products.On January 1,O'Hare purchased $3,000 of raw materials with cash.The entry to record the purchase of raw materials would:

How should a company choose between a job-order costing system and a process costing system?

In a job-order costing system,each department has a Work in Process account.

A company that uses a process costing system would calculate the cost per equivalent unit and then use that amount to allocate costs between the goods transferred out and the beginning work in process inventory.

Generally accepted accounting principles (GAAP)prohibit the use of a hybrid costing system.

Process costing systems do not distinguish the cost of one unit of product from another.

During the current accounting period,O'Hare applied $14,500 of estimated overhead cost to production.Actual overhead costs were $14,325.Assuming that the balance in the Manufacturing Overhead is insignificant,the recognition of the transaction to close that account will:

A job's budgeted costs for materials,labor,and overhead are inserted on the job cost sheet when production is completed.

The Purina Company would use a job-order costing system to account for the costs of making its premium dog food.

The entry to record the completion of a job in a job-order costing system would cause:

Management Accounting and Corporate Governance

Cost Behavior, operating Leverage, and Profitability Analysis

Analysis of Cost, volume, and Pricing to Increase Profitability

Cost Accumulation,tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Financial Statement Analysis

Statement of Cash Flows

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Exam 12: Job-Order, process, and Hybrid Costing Systems

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

In a job-order costing system,a separate job cost sheet is maintained for each job in order to facilitate costing.

The 10,000 units in Department B that are 30% complete are equivalent to 3,000 whole units.

Recognition of revenue from sale of finished goods is:

O'Hare Company is a manufacturing firm that uses a job-order costing system to determine the costs of its products.On January 1,O'Hare purchased $3,000 of raw materials with cash.The entry to record the purchase of raw materials would:

How should a company choose between a job-order costing system and a process costing system?

In a job-order costing system,each department has a Work in Process account.

A company that uses a process costing system would calculate the cost per equivalent unit and then use that amount to allocate costs between the goods transferred out and the beginning work in process inventory.

Generally accepted accounting principles (GAAP)prohibit the use of a hybrid costing system.

Process costing systems do not distinguish the cost of one unit of product from another.

During the current accounting period,O'Hare applied $14,500 of estimated overhead cost to production.Actual overhead costs were $14,325.Assuming that the balance in the Manufacturing Overhead is insignificant,the recognition of the transaction to close that account will:

A job's budgeted costs for materials,labor,and overhead are inserted on the job cost sheet when production is completed.

The Purina Company would use a job-order costing system to account for the costs of making its premium dog food.

The entry to record the completion of a job in a job-order costing system would cause:

Management Accounting and Corporate Governance

Cost Behavior, operating Leverage, and Profitability Analysis

Analysis of Cost, volume, and Pricing to Increase Profitability

Cost Accumulation,tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Financial Statement Analysis

Statement of Cash Flows

Filters