Deck 5: Job-Order Costing

Question 1

Manufacturing and service firms producing unique products or services require job-order accounting systems.

Answer 1

True

Question 2

The three manufacturing cost elements are direct materials,direct labor,and overhead.

Answer 2

True

Question 3

Actual overhead is used to arrive at the cost of goods manufactured.

Answer 3

False

Question 4

Using a time ticket,the cost accounting department can enter the cost of direct materials onto the correct job-order cost sheet.

Question 5

Costs reported on the financial statements must be estimated costs.

Question 6

Actual overhead is reconciled with applied overhead at the beginning of the period.

Question 7

If actual overhead is greater than applied overhead,the variance is called underapplied overhead.

Question 8

Production costs consist of direct materials,direct labor,and overhead.

Question 9

The cost of goods sold appearing on the income statement as an expense is the normal cost of goods sold.

Question 10

There are other source documents besides the time ticket and the material requisition form used to fill out the job-order cost sheet.

Question 11

A job-order cost sheet is the source document where direct labor costs are assigned to individual jobs.

Question 12

If the overhead variance is immaterial,it is allocated among the ending balances of Work in Process,Finished Goods,and Cost of Goods Sold.

Question 13

The use of a departmental rate has the advantage of being simple and reduces data collection requirements.

Question 14

Departmental overheads cannot be added together to get plantwide overhead.

Question 15

The raw materials account is an inventory account located on the income statement.

Question 16

The use of normal costing means that actual overhead costs are assigned directly to jobs.

Question 17

The work-in-process account consists of all the job-order cost sheets for the completed jobs.

Question 18

In an actual cost system,actual direct materials,actual direct labor and estimated overhead are used to determine unit cost.

Question 19

The difference between actual overhead and applied overhead is called an overhead variance.

Question 20

The key feature of job-order costing is that the cost of one job differs from that of another job and must be kept track of separately.

Question 21

Actual overhead costs are accumulated in the overhead control account.

Question 22

Overhead costs are assigned to Finished Goods using a predetermined rate.

Question 23

In job-order costing,the journal entry for $7,200 raw materials requisitioned for use in production is:

Question 24

The journal entry for $17 of underapplied overhead is:

Question 25

In job-order costing,the journal entry for $1,700 of unpaid direct labor is:

Question 26

In job-order costing,the journal entry for a completed job costing $7,000 but not sold is:

Question 27

_________________ is found by multiplying the predetermined overhead rate by the actual use of the associated activity for the period.

Question 28

In a _______________________________ costs are accumulated by job.

Question 29

A(n)___________________________ determines unit cost by adding actual direct materials,actual direct labor,and estimated overhead.

Question 30

__________________________ is a costing system that accumulates production costs by process or by department for a given period of time.

Question 31

In job-order costing,the journal entry for overhead applied at the rate of $3 per direct labor hour when 210 direct labor hours were worked is:

Question 32

The journal entry for $17,000 materials purchased on account is:

Question 33

If actual overhead is greater than applied overhead,then the variance is called ___________________.

Question 34

Strict ______________________ are rarely used because they cannot provide accurate unit cost information on a timely basis.

Question 35

A _____________________ is a single overhead rate calculated by using all estimated overhead for a factory divided by the estimated activity level across the entire factory.

Question 36

The cost of completed units is always debited to Work-in-Process and credited to Finished Goods.

Question 37

The difference between actual overhead and applied overhead is called a (n)_________________.

Question 38

When materials are put into production,they are taken from the Raw Materials account and put into the Work in Process account.

Question 39

The ___________________________ is calculated at the beginning of the year by dividing the total estimated annual overhead by the total estimated level of cost driver.

Question 40

A _______ is one distinct unit or set of units.

Question 41

_________________________ is the amount that appears as an expense on the income statement after the adjustment for the period's overhead variance is recorded.

Question 42

How are unit costs calculated?

A)by dividing total cost associated with the units produced by the unit cost
B)by adding all variable costs per unit associated with the units produced
C)by dividing total fixed costs by the number of units produced
D)by dividing total cost associated with the units produced by the number of units produced
E)by adding unit variable costs to total fixed costs

Question 43

Which method of measuring costs associated with production is more widely used in practice?

A)Normal Costing
B)Actual Costing
C)Both are used equally.
D)Neither one is used.
E)cannot be determined

Question 44

The ____________________ of allocation recognizes all interactions among support departments.

Question 45

Which of the following statements is true about overhead?

A)Overhead costs are not incurred uniformly throughout the year.
B)Overhead costs have a definite,identifiable relationship with units produced.
C)Low production in one month would give rise to low unit overhead costs.
D)All of these are correct.
E)None of these are correct.

Question 46

When units are sold,their total cost is debited to _______________ and credited to ____________.

Question 47

Which of the following is the assignment process used with normal costing?

A)Actual direct materials,actual direct labor and actual overhead cost are assigned to products.
B)Actual direct materials cost is assigned to products,but direct labor and overhead costs are assigned using predetermined rates.
C)Actual direct labor cost is assigned to products,but direct material and overhead costs are assigned using predetermined rates.
D)Actual direct material and direct labor costs are assigned to products,but overhead costs are assigned using predetermined rates.
E)all manufacturing costs are assigned using predetermined rates

Question 48

Firms in the ____ business are most likely to use a process-costing system.

A)Printing
B)Dental
C)Construction
D)Petroleum
E)Automobile repair

Question 49

A source document by which direct labor costs are assigned to individual jobs is known as a _______________.

Question 50

When materials are requested for production the cost is removed from ____________ and added to ____________.

Question 51

Which of the following is not a characteristic of job-order costing?

A)Wide variety of distinct products
B)Unit cost is computed by dividing process costs of the period by the units produced in the period
C)Unit cost is computed by dividing total job costs by units produced on that job
D)Costs accumulated by job
E)typically,the cost of one job is different from that of another job

Question 52

________________________ are directly responsible for creating the products or services sold to customers.

Question 53

Applied overhead costs are charged to ________________.

Question 54

Production costs do not include:

A)direct materials
B)direct labor
C)variable overhead
D)fixed overhead
E)all of these are production costs.

Question 55

Which type of cost poses the most problems in using an actual cost system?

A)Direct materials
B)Overhead
C)Direct labor
D)All of these are correct.
E)None of these are correct.

Question 56

Figure 5-1. Morrow Company applies overhead based on direct labor hours.At the beginning of the year,Morrow estimates overhead to be $620,000,machine hours to be 180,000,and direct labor hours to be 40,000.During February,Morrow has 4,200 direct labor hours and 8,000 machine hours.
Refer to Figure 5-1.What is the predetermined overhead rate?

A)$3.44 per machine hour
B)$147.62 per direct labor hour
C)$15.50 per direct labor hour
D)$77.50 per machine hour
E)none of these are correct

Question 57

The cost of goods sold before an adjustment for an overhead variance is called ____________________.

Question 58

The _____________________ is subsidiary to the work-in-process account and is the primary document for accumulating all costs related to a particular job.

Question 59

Which of the following are easy to trace to individual jobs?

A)direct materials and overhead
B)direct materials and direct labor
C)direct labor and overhead
D)overhead and indirect labor
E)depreciation on machinery and indirect labor

Question 60

A __________________________ is used by the cost accounting department to enter the cost of direct materials onto the correct job-order cost sheet.

Question 61

The Kraig Corporation manufactures custom-made purses.The following data pertains to Job XY5: Plantwide overhead is applied using a plant-wide rate based on direct labor hours.Plantwide overhead was budgeted at $60,000 for the year and the direct labor hours were estimated to be 15,000.Job XY5 consists of 50 units.What is overhead cost assigned to Job XY5?

A)$200
B)$400
C)$750
D)$1,500

Question 62

A normal job-order costing system is a system that uses:

A)actual costs for direct materials and estimated costs for direct labor and overhead.
B)estimated costs for direct materials,direct labor,and overhead.
C)actual costs for direct materials and direct labor and estimated costs for overhead.
D)actual costs for direct materials and overhead,estimated costs for direct labor.

Question 63

The predetermined overhead rate is usually calculated

A)at the end of each month.
B)at the beginning of each month.
C)at the beginning of the year.
D)at the end of the year.

Question 64

At the beginning of the year,Wilson Company estimated the following: Wilson used normal costing and applies overhead on the basis of direct labor hours.For the month of September,direct labor hours equaled 9,350 and actual overhead equaled $46,750.
Calculate the overhead applied to production in September.

A)$56,100
B)$30,000
C)$46,750
D)$5 per direct labor hour
E)none of these

Question 65

Figure 5-3. Mitchell's Softball Gloves Company estimated the following at the beginning of the year:
Mitchell uses departmental overhead rates.In the assembly department,direct labor hours are used to apply overhead.Machine hours are used to apply overhead in the testing department.
Actual data for August is as follows:
Refer to Figure 5-3.Mitchell decides to continue using departmental overhead rates.If a job spends 4 hours in assembly and 3 hours in testing,what is the amount of overhead charged to the job?

A)$22
B)$20
C)$28
D)$50.54
E)none of these

Question 66

Carlson Company uses a predetermined rate to apply overhead.At the beginning of the year,Carlson estimated its overhead costs at $240,000,direct labor hours at 40,000,and machine hours at 10,000.Actual overhead costs incurred were $249,280,actual direct labor hours were 41,000,and actual machine hours were 11,000. If the predetermined overhead rate is based on machine hours,what is the total amount credited to the plantwide overhead account for the year for Carlson?

A)$249,280
B)$246,000
C)$240,000
D)$264,000

Question 67

Figure 5-2. At the beginning of the year,Kyla Inc.estimated that overhead would be $880,000 and direct labor hours would be 220,000.At the end of the year,actual overhead was $920,600 and there were actually 230,000 direct labor hours.
Refer to Figure 5-2.What is the overhead variance?

A)$600 underapplied
B)$600 overapplied
C)$200 underapplied
D)$400 overapplied
E)$800 underapplied

Question 68

Figure 5-1. Morrow Company applies overhead based on direct labor hours.At the beginning of the year,Morrow estimates overhead to be $620,000,machine hours to be 180,000,and direct labor hours to be 40,000.During February,Morrow has 4,200 direct labor hours and 8,000 machine hours.
Refer to Figure 5-1.If the actual overhead for February is $64,700,what is the overhead variance and is it overapplied or underapplied?

A)$400 underapplied
B)$200 overapplied
C)$1,000 underapplied
D)$400 overapplied
E)$600 overapplied

Question 69

The document that lists the total cost for a single job is a

A)job-order cost sheet.
B)materials requisition form.
C)time ticket.
D)purchase order.
E)none of these are correct.

Question 70

Figure 5-3. Mitchell's Softball Gloves Company estimated the following at the beginning of the year:
Mitchell uses departmental overhead rates.In the assembly department,direct labor hours are used to apply overhead.Machine hours are used to apply overhead in the testing department.
Actual data for August is as follows:
Refer to Figure 5-3.Mitchell decides to continue using departmental overhead rates.What are the predetermined rates for the Assembly and Testing departments respectively?

A)Assembly: $4 per direct labor hour; Testing: $2 per machine hour
B)Assembly: $2 per direct labor hour; Testing: $4 per machine hour
C)Assembly: $4 per direct labor hour; Testing: $4 per direct labor hour
D)Assembly: $7.22 per machine hour; Testing: $7.22 per machine hour
E)none of these

Question 71

The overhead variance is least likely to be

A)zero (actual overhead equals applied overhead).
B)underapplied.
C)overapplied.
D)immaterial.
E)underapplied and material.

Question 72

Figure 5-3. Mitchell's Softball Gloves Company estimated the following at the beginning of the year:
Mitchell uses departmental overhead rates.In the assembly department,direct labor hours are used to apply overhead.Machine hours are used to apply overhead in the testing department.
Actual data for August is as follows:
Refer to Figure 5-3.If Mitchell uses a plantwide overhead rate based on direct labor hours,instead of departmental rates,what is the predetermined overhead rate rounded to the nearest cent?

A)$5 per direct labor hour
B)$7.22 per machine hour
C)$4 per direct labor hour
D)$2.57 per direct labor hour
E)$.52 per direct labor hour

Question 73

On February 1,Job 12 had a beginning balance of $200.During February,direct materials of $500 and direct labor of $200 were added to the job.Overhead is applied to production at a rate of 55% of direct labor.There are 5 units in Job 12. What is the unit cost?

A)$202
B)$1,010
C)$162
D)$810
E)none of these

Question 74

The predetermined overhead rate is calculated by:

A)Estimated annual overhead/Estimated manufacturing cost
B)Actual annual overhead/Estimated annual activity level
C)Estimated annual overhead/Actual annual activity level
D)Actual annual overhead/Actual annual activity level
E)Estimated annual overhead/Estimated annual activity level

Question 75

Manufacturing overhead

A)consists of all costs other than direct materials.
B)consists of all manufacturing costs other than direct materials.
C)consists of all costs other than direct materials and direct labor.
D)consists of all manufacturing costs other than direct materials and direct labor.

Question 76

Smith has applied overhead of $73,000 and actual overhead of $87,600 for the month of November.It applies overhead based on direct labor hours and those equaled 14,600 in November.Overhead for the year was estimated to be $900,000.How many direct labor hours were estimated for the year?

A)175,200
B)180,000
C)$5
D)150,000
E)$6

Question 77

Figure 5-1. Morrow Company applies overhead based on direct labor hours.At the beginning of the year,Morrow estimates overhead to be $620,000,machine hours to be 180,000,and direct labor hours to be 40,000.During February,Morrow has 4,200 direct labor hours and 8,000 machine hours.
Refer to Figure 5-1.What is the amount of overhead applied for February?

A)$65,100
B)$42,000
C)$24,000
D)$78,200
E)$66,410

Question 78

Figure 5-2. At the beginning of the year,Kyla Inc.estimated that overhead would be $880,000 and direct labor hours would be 220,000.At the end of the year,actual overhead was $920,600 and there were actually 230,000 direct labor hours.
Refer to Figure 5-2.What is the predetermined overhead rate?

A)$4 per direct labor hour
B)$2.63 per direct labor hour
C)$4.18 per direct labor hour
D)$880,000
E)none of these are correct

Question 79

Figure 5-3. Mitchell's Softball Gloves Company estimated the following at the beginning of the year:
Mitchell uses departmental overhead rates.In the assembly department,direct labor hours are used to apply overhead.Machine hours are used to apply overhead in the testing department.
Actual data for August is as follows:
Refer to Figure 5-3.Using departmental overhead rates,which of the following is correct?

A)Applied overhead for the assembly department is $54,000.
B)Applied overhead for the testing department is $4,860.
C)Applied overhead for both departments combined is $63,720.
D)Overhead for the assembly department is underapplied.
E)none of these are correct.

Question 80

The unit cost of a job consists of the total costs of

A)materials used on the job.
B)labor worked on the job.
C)applied overhead.
D)All of these are correct.
E)None of these are correct.