Question 1

Which of the following costing systems would always use job cost sheets?

Accepted Answer

A) Job order costing 
B) Process costing 
C) Activity-based costing 
D) Specific-identification costing 
A) Job order costing 
B) Process costing 
C) Activity-based costing 
D) Specific-identification costing

Question 2

The journal entry that accounts for the $300,000 transferred out of Work in Process account includes a debit of $300,000 to:

Accepted Answer

A) Finished Goods. 
B) Cost of Goods Sold. 
C) Accounts Receivable. 
D) Sales. 
A) Finished Goods. 
B) Cost of Goods Sold. 
C) Accounts Receivable. 
D) Sales.

Question 3

Langdon Company manufactures custom designed toy sailboats.The company uses a job order costing system.Overhead is applied based on direct labor hours.Estimated overhead for 2018 is $11,840 and the company estimates it will use 7,400 direct labor hours.The following events occurred in March.
(a. )The company purchased materials for $800 on account.
(b. )The production supervisor requisitioned 15 sheets of fiberglass for constructing the boats.The fiberglass was in stock and originally cost $3 a sheet.
(c. )Direct labor on the boats cost $500.
(d. )More materials were purchased for $350 on account.
(e. )Indirect labor costs were $210.
(f. )A utility bill for the boat factory was $230 and was paid in cash.
(g. )A repair bill for the salesman's car was $75 and will be paid next month.
(h. )Additional materials were placed into production that cost $215.
(i. )Manufacturing overhead was applied (direct labor during March totaled 500 hours)
(j. )One sailboat was completed which cost $325.
(k. )The completed sailboat was sold for $750.Record the sale and the cost of sale.
Required:
(1. )Determine the overhead application rate.
(2. )Prepare journal entries for the above transactions.
(3. )What is the cost of the remaining Work in Process?

Accepted Answer

(1. )$1.60
(2. )Jour

Question 4

The Work in Process account in a job order cost accounting system will be debited for:

Accepted Answer

A) Only direct labor and direct materials. 
B) Direct labor,direct materials,and applied overhead. 
C) Direct labor,direct materials,and actual overhead. 
D) Only direct materials and applied overhead. 
A) Only direct labor and direct materials. 
B) Direct labor,direct materials,and applied overhead. 
C) Direct labor,direct materials,and actual overhead. 
D) Only direct materials and applied overhead.

Question 5

Manufacturing overhead is not:

Accepted Answer

A) A product cost. 
B) An indirect cost. 
C) A manufacturing cost. 
D) A period cost. 
A) A product cost. 
B) An indirect cost. 
C) A manufacturing cost. 
D) A period cost.

Question 6

In activity-based costing,only one cost driver should be used in applying overhead.

Accepted Answer

A) True 
 B)False

Question 7

The year-end balance in the Materials Inventory controlling account is equal to:

Accepted Answer

A) The total of the various materials subsidiary ledger accounts (the materials on hand at the end of the period). 
B) The total amount of materials requisitioned during the period. 
C) The total amount of materials purchased during the period. 
D) The amount of materials debited to the Work-in-Process Inventory account during the period. 
A) The total of the various materials subsidiary ledger accounts (the materials on hand at the end of the period). 
B) The total amount of materials requisitioned during the period. 
C) The total amount of materials purchased during the period. 
D) The amount of materials debited to the Work-in-Process Inventory account during the period.

Question 8

Since cost accounting systems provide managers with information necessary to manage operations,the information from cost accounting systems is not useful for external reporting purposes.

Accepted Answer

A) True 
 B)False

Question 9

At the end of the accounting period,applied overhead was larger than actual overhead by a material amount.The over-applied overhead should be:

Accepted Answer

A) Treated as an extraordinary gain. 
B) Treated as an extraordinary loss. 
C) Apportioned among Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold. 
D) Ignored;actual overhead is determined only for internal control purposes. 
A) Treated as an extraordinary gain. 
B) Treated as an extraordinary loss. 
C) Apportioned among Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold. 
D) Ignored;actual overhead is determined only for internal control purposes.

Question 10

Which of the following would likely be the most appropriate cost driver to allocate machinery set-up costs to products?

Accepted Answer

A) Machine hours 
B) Direct labor hours 
C) Number of production runs 
D) Repair work orders 
A) Machine hours 
B) Direct labor hours 
C) Number of production runs 
D) Repair work orders

Question 11

The method used by managers when comparing unit costs with budgeted costs or other measures is broadly known as:

Accepted Answer

A) Sales management. 
B) Cost control. 
C) Employee evaluation. 
D) Account reconciliation. 
A) Sales management. 
B) Cost control. 
C) Employee evaluation. 
D) Account reconciliation.

Question 12

In a job cost system,the Work-in-Process Inventory controlling account may be reconciled to the total of the:

Accepted Answer

A) Employee time cards. 
B) Materials requisitions. 
C) Work-in-Process Inventory records for each department or process. 
D) Job cost sheets. 
A) Employee time cards. 
B) Materials requisitions. 
C) Work-in-Process Inventory records for each department or process. 
D) Job cost sheets.

Question 13

Which of the following is not a commonly used cost accounting system?

Accepted Answer

A) Manufacturing yield costing 
B) Job order costing 
C) Process costing 
D) Activity-based costing 
A) Manufacturing yield costing 
B) Job order costing 
C) Process costing 
D) Activity-based costing

Question 14

An increase in an activity base must cause an increase in actual overhead costs incurred for that base to be considered a cost driver.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an advantage of developing a predetermined overhead application rate?

Accepted Answer

A) Long-run fluctuations in volume of output are eliminated. 
B) In a job order system,unit costs can be determined only at the end of the period. 
C) The overhead application rate facilitates assigning overhead costs to the ending inventory of work in process. 
D) Actual overhead will always be less than applied overhead. 
A) Long-run fluctuations in volume of output are eliminated. 
B) In a job order system,unit costs can be determined only at the end of the period. 
C) The overhead application rate facilitates assigning overhead costs to the ending inventory of work in process. 
D) Actual overhead will always be less than applied overhead.

Question 16

Activity-based costing tracks cost to the activities that consume resources.

Accepted Answer

A) True 
 B)False

Question 17

If the manufacturing overhead account at month end has a credit balance before adjustment,this indicates that overhead is under-applied.

Accepted Answer

A) True 
 B)False

Question 18

Under-applied overhead at the end of a month:

Accepted Answer

A) Results when actual overhead costs are less than amounts applied to work in process. 
B) Indicates a poorly designed cost accounting system. 
C) Is represented by a debit balance remaining in the Manufacturing Overhead account. 
D) Is represented by a credit balance remaining in the Work in Process Inventory account. 
A) Results when actual overhead costs are less than amounts applied to work in process. 
B) Indicates a poorly designed cost accounting system. 
C) Is represented by a debit balance remaining in the Manufacturing Overhead account. 
D) Is represented by a credit balance remaining in the Work in Process Inventory account.

Question 19

Activity-based costing uses multiple activity bases to assign overhead costs to units of production.

Accepted Answer

A) True 
 B)False

Question 20

An overhead application rate is a device used to assign overhead costs to units of product in proportion to some "activity base" that can be traced directly to the manufactured products.

Accepted Answer

A) True 
 B)False

Exam 17: Job Order Cost Systems and Overhead Allocations

Which of the following costing systems would always use job cost sheets?

The journal entry that accounts for the $300,000 transferred out of Work in Process account includes a debit of $300,000 to:

The Work in Process account in a job order cost accounting system will be debited for:

Manufacturing overhead is not:

In activity-based costing,only one cost driver should be used in applying overhead.

The year-end balance in the Materials Inventory controlling account is equal to:

Since cost accounting systems provide managers with information necessary to manage operations,the information from cost accounting systems is not useful for external reporting purposes.

At the end of the accounting period,applied overhead was larger than actual overhead by a material amount.The over-applied overhead should be:

Which of the following would likely be the most appropriate cost driver to allocate machinery set-up costs to products?

The method used by managers when comparing unit costs with budgeted costs or other measures is broadly known as:

In a job cost system,the Work-in-Process Inventory controlling account may be reconciled to the total of the:

Which of the following is not a commonly used cost accounting system?

An increase in an activity base must cause an increase in actual overhead costs incurred for that base to be considered a cost driver.

Which of the following is an advantage of developing a predetermined overhead application rate?

Activity-based costing tracks cost to the activities that consume resources.

If the manufacturing overhead account at month end has a credit balance before adjustment,this indicates that overhead is under-applied.

Under-applied overhead at the end of a month:

Activity-based costing uses multiple activity bases to assign overhead costs to units of production.

An overhead application rate is a device used to assign overhead costs to units of product in proportion to some "activity base" that can be traced directly to the manufactured products.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

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