Deck 19: Job Order Cost Accounting

Question 1

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

Answer 1

False

Question 2

There are two basic types of cost accounting systems: job order costing and periodic costing.

Answer 2

False

Question 3

Job order costing is applicable to manufacturing firms only and not service firms.

Answer 3

False

Question 4

A company that produces a large number of standardized units would normally use a job order costing system.

Question 5

A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Work in Process Inventory.

Question 6

A company's file of job cost sheets jobs not yet completed equals the balance in the Finished Goods Inventory account.

Question 7

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.

Question 8

Both direct and indirect labor costs are recorded on the individual job cost sheets.

Question 9

A job order costing system would be appropriate for a manufacturer of automobile tires.

Question 10

Job order production systems would be appropriate for companies that produce custom homes,specialized equipment,and special computer systems.

Question 11

Job order production systems would be appropriate for companies that produce training films for a specific customer or custom-made furniture to be used in a new five-star resort hotel.

Question 12

When a job is finished,its job cost sheet is completed and moved from the file of jobs in process to the file of finished jobs that are yet to be delivered to customers.

Question 13

The collection of cost sheets for unfinished jobs makes up a subsidiary ledger controlled by the Work in Process Inventory account in the general ledger.

Question 14

The cost of all direct materials issued to production is debited to Work in Process Inventory.

Question 15

Job order production systems would be appropriate for companies that produce compact disks or disposable cameras.

Question 16

The direct materials section of a job cost sheet shows the materials costs assigned to a job,but the direct labor section only shows the total hours of labor allocated to the job.

Question 17

Cost accounting systems accumulate costs and then assigns them to products or services.

Question 18

Cost accounting information is helpful to management for pricing decisions but has no effect on controlling costs.

Question 19

The file of job cost sheets for completed but undelivered jobs equals the balance in the Work in Process Inventory account.

Question 20

Service firms,unlike manufacturing firms,should only use actual costs when determining a selling price for their services.

Question 21

In a job order costing system,indirect labor costs are debited to the Factory Overhead account.

Question 22

Direct materials and direct labor are examples of costs that are debited to the Factory Overhead account in a job costing system.

Question 23

When time ticket information is entered into the accounting system,the journal entry is a debit to Factory Payroll and a credit to Work in Process Inventory.

Question 24

Actual factory overhead incurred in a job costing system is debited to a Factory Overhead general ledger account and credited to various other accounts.

Question 25

Predetermined overhead rates are calculated at the end of the accounting period once the actual amount of factory overhead is known.

Question 26

When materials are used as indirect materials,their cost is debited to the Factory Overhead account.

Question 27

Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

Question 28

Since a predetermined overhead rate is established before a period begins,this rate is revised many times during the period to compensate for inaccurate estimates previously made.

Question 29

Materials requisitions and time tickets are cost accounting source documents.

Question 30

A time ticket is a source document an employee uses to record the number of hours at work and that is used each pay period to determine the total labor cost.

Question 31

A time ticket is a source document that an employee uses to report how much direct and indirect labor was performed for a job and is used to determine the amount of direct labor to charge to the job and the amount of indirect labor to charge to factory overhead.

Question 32

Under a job order costing system,individual jobs are always charged with actual overhead costs when they are transferred to finished goods.

Question 33

A materials requisition is a source document used by production managers to request materials for production and also used to assign materials costs to specific jobs or to overhead.

Question 34

Predetermined overhead rates are necessary because cost accountants use periodic inventory systems.

Question 35

The predetermined overhead rate based on direct labor cost is the ratio of estimated overhead cost to estimated direct labor cost for the period.

Question 36

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.

Question 37

A time ticket is a source document used by an employee to record the total number of hours worked and serves as a source document for entries to record labor costs.

Question 38

The predetermined overhead rate is used to allocate overhead cost to jobs.

Question 39

Factory overhead is often collected and summarized in a subsidiary factory overhead ledger.

Question 40

A time ticket is a source document used by an employee to record the number of hours worked on a particular job during the work day.

Question 41

The Factory Overhead account will have a credit balance at the end of a period if overhead applied during the period is greater than the overhead incurred.

Question 42

Overapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the overhead incurred during a period.

Question 43

Period costs for a manufacturing company,such as selling and administrative expenses,are recorded directly to Work In Process Inventory when they are incurred.

Question 44

In comparison to a general accounting system,a cost accounting system for a manufacturing company places an emphasis on:

A)Periodic inventory counts.
B)Total costs.
C)Continually updating costs of materials,work in process,and finished goods inventories.
D)Products and average costs.
E)Large volume operations involving standardized products.

Question 45

If actual overhead incurred during a period exceeds applied overhead,the difference will be a credit balance in the Factory Overhead account at the end of the period.

Question 46

The schedule of cost of goods manufactured for a job costing system includes total actual factory overhead.

Question 47

If overhead is underapplied,it means that individual jobs have not been charged enough during the year and the cost of goods sold reported is too low.

Question 48

In a job order costing system,any immaterial underapplied overhead at the end of the period can be charged entirely to Cost of Goods Sold.

Question 49

A system of accounting for production operations that produces timely information about inventories and manufacturing costs per unit of product is a:

A)Finished goods accounting system.
B)General accounting system.
C)Manufacturing accounting system.
D)Cost accounting system.
E)Production accounting system.

Question 50

Material amounts of under- or overapplied factory overhead are always closed entirely to Cost of Goods Sold at the end of an accounting period.

Question 51

A job order costing system would best fit the needs of a company that makes:

A)Shoes and apparel.
B)Paint.
C)Cement.
D)Custom machinery.
E)Pencils and erasers.

Question 52

Overapplied or underapplied overhead should be removed from the Factory Overhead account at the end of each accounting period.

Question 53

Features of a job costing system include all but which of the following:

A)Diversity of products produced.
B)Mass production.
C)Heterogeneity.
D)Customization.
E)Separate manufacturing from other products.

Question 54

Manufacturing costs incurred for jobs completed during an accounting period can bypass the inventory accounts on the balance sheet and be recorded directly in expense accounts.

Question 55

Underapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the overhead incurred during a period.

Question 56

Job order production is also known as:

A)Mass production.
B)Process production.
C)Unit production.
D)Customized production.
E)Standard costing.

Question 57

Job order costing systems normally use:

A)Periodic inventory systems.
B)Perpetual inventory systems.
C)Real inventory systems.
D)General inventory systems.
E)Any inventory systems is acceptable.

Question 58

The production activities for a customized product represent a(n):

A)Operation.
B)Job.
C)Unit.
D)Pool.
E)Process.

Question 59

Cost accounting systems used by manufacturing companies are based on the:

A)Periodic inventory system.
B)Perpetual inventory system.
C)Finished goods inventories.
D)Weighted average inventories.
E)LIFO inventory system.

Question 60

The two basic types of cost accounting systems are:

A)Job order costing and perpetual costing.
B)Job order costing and customized product costing.
C)Job order costing and customized service costing.
D)Job order costing and process costing.
E)Job order costing and periodic costing.

Question 61

A job order production system would be appropriate for a company that produces which one of the following items?

A)A landscaping design for a new hospital.
B)Seedlings for sale in a nursery.
C)Sacks of yard fertilizer.
D)Packets of flower seeds.
E)Small gardening tools,including rakes,shovels,and hoes.

Question 62

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed.The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800.Therefore,the company's overhead application rate is:

A)40%.
B)50%.
C)80%.
D)200%.
E)220%.

Question 63

A company that makes which of the following types of products would best be suited for a job costing system?

A)Fruit juice
B)Bathing suits
C)Snack chips
D)Compact discs
E)Custom jewelry

Question 64

The Work in Process Inventory account for DG Manufacturing follows.Compute the cost of jobs completed and transferred to Finished Goods Inventory. The cost of units transferred to finished goods is:

A)$97,000.
B)$105,900.
C)$88,100.
D)$95,200.
E)$92,500.

Question 65

Omega Contractors manufactures each house to customer specifications.It most likely would use:

A)Process costing.
B)A periodic inventory system.
C)Unique costing.
D)Job order costing.
E)Activity-based costing.

Question 66

A job cost sheet shows information about each of the following items except:

A)The direct labor costs assigned to the job.
B)The name of the customer.
C)The costs incurred by the marketing department in selling the job.
D)The overhead costs assigned to the job.
E)The direct materials costs assigned to the job.

Question 67

Job A3B was ordered by a customer on September 25.During the month of September,Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor.The job was not finished by the end of the month,but needed an additional $3,000 of direct materials and additional direct labor of $6,500 to finish the job in October.The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred.What is the total cost of the job when it is completed in October?

A)$16,000
B)$22,500
C)$37,000
D)$26,500
E)$32,000

Question 68

The target cost for a job using job costing is calculated as

A)direct costs + desired profit.
B)direct costs - desired profit.
C)expected selling price - direct costs.
D)expected selling price - desired profit.
E)expected selling price + desired profit.

Question 69

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $3,200 debit balance after all posting is completed.The cost sheet of the one job still in process shows direct material cost of $1,400 and direct labor cost of $800.Therefore,the amount of the applied overhead is:

A)$1,800.
B)$2,200.
C)$1,000.
D)$800.
E)$2,400.

Question 70

Large aircraft producers such as the Boeing Company normally use:

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

Question 71

Job A3B was ordered by a customer on September 25.During the month of September,Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor.The job was not finished by the end of the month,but needed an additional $3,000 of direct materials in October and additional direct labor of $6,500 to finish the job.The company applies overhead at the end of each month at a rate of 200% of the direct labor cost.What is the amount of job costs added to Work in Process Inventory during October?

A)$16,000
B)$22,500
C)$37,000
D)$26,500
E)$32,000

Question 72

Job A3B was ordered by a customer on September 25.During the month of September,Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor.The job was not finished by the end of the month,but needed an additional $3,000 of direct materials and additional direct labor of $6,500 to finish the job in October.The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred.What is the balance in the Work in Process account at the end of September relative to Job A3B?

A)$5,500
B)$11,500
C)$6,500
D)$9,500
E)$14,500

Question 73

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

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

Question 74

The balance in the Work In Process Inventory at any point in time is equal to:

A)The costs for jobs finished during the period but not yet sold.
B)The cost of jobs ordered but not yet started into production.
C)The sum of the costs for all jobs in process but not yet completed.
D)The costs of all jobs started during the period,completed or not.
E)The sum of the materials,labor and overhead costs paid during the period.

Question 75

A type of production that yields customized products or services for each customer is called:

A)Customer orientation production.
B)Job order production.
C)Just-in-time production.
D)Job lot production.
E)Process production.

Question 76

A company that uses a job order costing system would make the following entry to record the flow of direct materials into production:

A)debit Work in Process Inventory,credit Cost of Goods Sold.
B)debit Work in Process Inventory,credit Raw Materials Inventory.
C)debit Work in Process Inventory,credit Factory Overhead.
D)debit Factory Overhead,credit Raw Materials Inventory.
E)debit Finished Goods Inventory,credit Raw Materials Inventory.

Question 77

The job order cost sheets used by Greene Company revealed the following: Job No.135 was completed during May and Jobs No.134 and 135 were shipped to customers in May.What was the company's cost of goods sold for May and the Work in Process inventory on May 31?

A)$3,200;$900.
B)$2,900;$1,200.
C)$1,200;$2,900.
D)$1,700;$1,200.
E)$4,100;$0.

Question 78

A job cost sheet includes:

A)Direct materials,direct labor,operating costs.
B)Direct materials,estimated overhead,administrative costs.
C)Direct labor,actual overhead,selling costs.
D)Direct material,direct labor,estimated overhead.
E)Direct materials,direct labor,selling costs.

Question 79

A perpetual record of a raw materials item that records data on the quantity and cost of units purchased,units issued for use in production,and units that remain in the raw materials inventory,is called a(n):

A)Materials ledger card.
B)Materials requisition.
C)Purchase order.
D)Materials voucher.
E)Purchase ledger.

Question 80

A document in a job order costing system that is used to record the costs of producing a job is a(n):

A)Job cost sheet.
B)Job lot.
C)Finished goods summary.
D)Process cost system.
E)Units-of-production sheet.