Deck 7: Job Costing

Question 1

Actual costing does not use a predetermined overhead rate to apply manufacturing overhead costs to jobs completed during the period.

Answer 1

True

Question 2

Normal costing uses the actual allocation base activity to apply manufacturing overhead costs to jobs during the period.

Answer 2

True

Question 3

One difference between jobs and projects is the account titles used in the costing process.

Answer 3

False

Question 4

Job cost sheets are used in accounting systems as a subsidiary ledger for the Work-in-Process account.

Question 5

The predetermined overhead rate is computed by dividing the estimated activity of the allocation base into the estimated manufacturing overhead costs.

Question 6

Service organizations generally use the same job costing procedures as manufacturers.

Question 7

Overapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

Question 8

It is unethical to intentionally charge costs to the wrong job.

Question 9

Service organizations,by their nature,cannot have a balance in Work-in-Process Inventory.

Question 10

The periodic allocation of manufacturing overhead costs to job cost sheets is based on an event,not a transaction.

Question 11

At the end of the accounting period,manufacturing overhead costs are applied to uncompleted jobs using the same predetermined overhead rate that is used to apply manufacturing overhead costs to completed jobs.

Question 12

The journal entry to record actual manufacturing overhead for indirect labor debits Manufacturing Overhead (Control)and credits Work-in-Process inventory.

Question 13

The cost in the ending Finished Goods inventory account consists of the direct materials,direct labor,and manufacturing overhead of all jobs still in process at the end of the period.

Question 14

The journal entry to apply manufacturing overhead costs to completed jobs credits either Applied Manufacturing Overhead or Manufacturing Overhead (Control).

Question 15

Underapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

Question 16

A job is a product or service that can be easily and conveniently distinguished from other products/services.

Question 17

The journal entry to record actual manufacturing overhead for indirect material debits Manufacturing Overhead (Control)and credits Accounts Payable.

Question 18

Indirect material and indirect labor are two examples of manufacturing overhead costs.

Question 19

Accounting for direct materials and direct labor is easier than accounting for manufacturing overhead costs.

Question 20

Job shops have three types of inventory accounts: Finished Goods,Work-in-Process,and Direct Materials.

Question 21

If a company multiplies its predetermined overhead rate by the actual activity level of its allocation base,it is using

A)standard costing.
B)normal costing.
C)actual costing.
D)budget costing.
E)ideal costing.

Question 22

Which of the following documents is used as the basis for posting to the direct materials section of the job cost sheet?

A)Purchase requisition.
B)Materials requisition.
C)Receiving report.
D)Purchase order.
E)Time card.

Question 23

The journal entry to write-off an insignificant underapplied overhead balance at the end of an accounting period is

A)a
B)b
C)c
D)d

Question 24

Which of the following companies would most likely use job costing?

A)Paper manufacturer
B)Paint producer
C)Breakfast cereal maker
D)Advertising agency

Question 25

The journal entry to record the completion of a job in a job order cost system is

A)a
B)b
C)c
D)d
E)e

Question 26

In a job costing system,the dollar amount in the journal entry that transfers the costs of jobs from Work-in-Process Inventory to Finished Goods Inventory is the sum of the costs charged to all jobs

A)sold during the period.
B)completed during the period.
C)in process during the period.
D)started in process during the period.
E)completed and sold during the period.

Question 27

Which of the following accounts is used to accumulate the actual manufacturing overhead costs incurred during a period?

A)Applied Manufacturing Overhead
B)Work-in-Process Inventory
C)Manufacturing Overhead Control
D)Cost of Goods Sold
E)Finished Goods Inventory

Question 28

If a company multiplies its actual overhead rate by the actual activity level of its allocation base,it is using

A)standard costing.
B)normal costing.
C)actual costing.
D)budget costing.
E)ideal costing.

Question 29

Which of the following statements is (are)true regarding the application of manufacturing overhead? (A)Manufacturing overhead is only recorded on the job cost sheets when (a)financial statements are prepared or a job is completed.
(B)Overapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

A)Only A is true.
B)Only B is true.
C)Both A and B are true.
D)Neither A nor B is true.

Question 30

Which of the following statements is (are)true regarding product costing? (A)A job is a cost object that can be easily and conveniently distinguished from other cost objects.
(B)Job cost sheets are used in accounting systems as a subsidiary ledger for the Work-in-Process account.

A)Only A is true.
B)Only B is true.
C)Both A and B are true.
D)Neither A nor B is true.

Question 31

Underapplied overhead occurs when the balance in the Manufacturing Overhead Control account is:

A)greater than the balance in the Applied Manufacturing Overhead account.
B)equal to the balance in the Applied Manufacturing Overhead account.
C)less than the balance in the Applied Manufacturing Overhead account.
D)less than the balance in the Finished Goods Inventory account.

Question 32

The journal entry to record requisitions of material for new jobs started during the period is

A)a
B)b
C)c
D)d
E)e

Question 33

Which of the following documents is used as the basis for posting to the direct labor section of the job cost sheet?

A)Purchase requisition.
B)Materials requisition.
C)Receiving report.
D)Purchase order.
E)Time card.

Question 34

What are the transfers-out from the Finished Goods Inventory called?

A)Cost of Goods Manufactured
B)Cost of Goods Available
C)Cost of Goods Completed
D)Cost of Goods Sold

Question 35

The journal entry to record the completion of a contract in a job costing system for a service firm is

A)a
B)b
C)c
D)d
E)e

Question 36

The journal entry to write-off a significant underapplied overhead balance at the end of an accounting period is

A)a
B)b
C)c
D)d

Question 37

The journal entry to record the actual manufacturing overhead costs for indirect material is

A)a
B)b
C)c
D)d
E)e

Question 38

The journal entry to record the completion of a job in a job costing system is

A)a
B)b
C)c
D)d
E)e

Question 39

For which of the following businesses would the job order cost system be appropriate?

A)Auto repair shop
B)Crude oil refinery
C)Drug manufacturer
D)Root beer producer

Question 40

One of the primary differences between job costing for service and manufacturing companies is service firms generally

A)use fewer direct materials.
B)have less direct labor.
C)do not use predetermined overhead rates.
D)have no Work in Process Inventory.

Question 41

The Work-in-Process Inventory account of a manufacturing firm has a balance of $2,400 at the end of an accounting period.The job cost sheets of two uncompleted jobs show charges of $400 and $200 for materials used,and charges of $300 and $500 for direct labor used.Overhead is applied as a percentage of direct labor costs.The predetermined rate is

A)41.7%.
B)80.0%.
C)125.0%.
D)240.0%.

Question 42

Before prorating the manufacturing overhead costs at the end of 2008,the Cost of Goods Sold and Finished Goods Inventory had applied overhead costs of $57,500 and $20,000 in them,respectively.There was no work in process at the beginning or end of 2008.During the year,manufacturing overhead costs of $74,000 were actually incurred.The balance in the Applied Manufacturing Overhead was $77,500 at the end of 2008.If the under- or overapplied overhead is prorated between Cost of Goods Sold and the inventory accounts,how much will be the Cost of Goods Sold after the proration?

A)$58,403
B)$56,597
C)$60,197
D)$54,903

Question 43

What is the value of the ending Work-in-Process Inventory?

A)$13,261.50
B)$14,259.00
C)$88,410.00
D)$95,060.50

Question 44

The predetermined overhead rate for manufacturing overhead for 2008 is $4.00 per direct labor hour.Employees are expected to earn $5.00 per hour and the company is planning on paying its employees $100,000 during the year.However,only 75% of the employees are classified as "direct labor." What was the estimated manufacturing overhead for 2008?

A)$60,000
B)$75,000
C)$80,000
D)$93,750

Question 45

What is the predetermined manufacturing overhead rate per direct labor hour for the year?

A)$15
B)$20
C)$25
D)$30

Question 46

What was the amount of manufacturing overhead applied to Job A-101?

A)$16,000
B)$18,000
C)$24,000
D)$44,000

Question 47

The balance in the factory overhead account would represent the fact that overhead was

A)$1,050 underapplied
B)$3,150 underapplied
C)$1,250 overapplied
D)$4,350 overapplied

Question 48

Manufacturing overhead applied on the basis of direct labor hours was $120,000,while actual manufacturing overhead incurred was $124,000 for the month of April.Which of the following is always true given the statement above?

A)Overhead was overapplied by $4,000.
B)Overhead was underapplied by $4,000.
C)Actual direct labor hours exceeded budgeted direct labor hours.
D)Actual direct labor hours were less than budgeted direct labor hours.

Question 49

What is the company's Cost of Goods Sold?

A)$164,190.00
B)$139,561.50
C)$252,600.00
D)$214,710.50

Question 50

What is the amount of the under- or overapplied manufacturing overhead?

A)$1,000 underapplied
B)$3,000 overapplied
C)$4,000 underapplied
D)$7,000 overapplied

Question 51

Compute the Work-in-Process transferred to the finished goods warehouse on April 30 using the following information:

A)$650
B)$675
C)$700
D)$750

Question 52

The general journal entry to record the issuance of the materials represented by the following materials requisitions for the month includes:

A)a debit to Materials Inventory,$15,945.
B)a debit to Materials Inventory,$16,670.
C)a debit to Work in Process Inventory,$15,945.
D)a credit to Work in Process Inventory,$15,945.
E)a credit to Factory Overhead,$725.

Question 53

Complex jobs that take multiple time periods and require the work of many different departments,divisions,or subcontractors are called

A)clients.
B)projects.
C)customers.
D)contracts.
E)vendors.

Question 54

What is the journal entry to record the direct labor costs for the period?

A)a
B)b
C)c
D)d

Question 55

Before prorating the manufacturing overhead costs at the end of 2008,the Cost of Goods Sold and Finished Goods Inventory had applied overhead costs of $57,500 and $20,000 in them,respectively.There was no Work-in-Process at the beginning or end of 2008.During the year,manufacturing overhead costs of $74,000 were actually incurred.The balance in the Applied Manufacturing Overhead was $77,500 at the end of 2008.If the under or overapplied overhead is prorated between Cost of Goods Sold and the inventory accounts,how much will be allocated to the Finished Goods Inventory?

A)$903
B)$1,217
C)$1,283
D)$2,597

Question 56

If Job 406 were sold on account for $41,500 how much gross profit would be recognized for the job?

A)$3,800
B)$5,900
C)$18,500
D)$35,600

Question 57

The journal entry to write-off an insignificant overapplied overhead balance at the end of an accounting period for a service firm is

A)a
B)b
C)c
D)d

Question 58

What is the value of the ending Finished Goods Inventory?

A)$13,261.50
B)$24,628.50
C)$26,481.00
D)$164,190.00

Question 59

What is the ending balance in the Work-in-Process Inventory on June 30?

A)$4,800
B)$5,300
C)$9,300
D)$9,800

Question 60

The end of the month Work-in-Process Inventory balance would be

A)$18,200.
B)$24,850.
C)$64,100.
D)$88,950.

Question 61

Which of the following actions do not cause an impropriety in job costing?

A)Misstating the stage of completion.
B)Choosing to use normal costing rather than actual costing.
C)Charging costs to the wrong job.
D)Choosing an allocation method based on the results rather than choosing the method based on resource usage.

Question 62

Under Pick Co.'s job order costing system manufacturing overhead is applied to work in process using a predetermined annual overhead rate.During January,Pick's transactions included the following: Pick had neither beginning nor ending inventory in Work-in-Process Inventory.What was the cost of jobs completed in January? (CPA adapted)

A)$302,000
B)$310,000
C)$322,000
D)$330,000

Question 63

Scottso Corporation applies overhead using an actual costing approach.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much overhead would be applied to production?

A)$266,400.
B)$274,320.
C)$279,607.
D)$287,920.

Question 64

Scottso Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much is the over- or underapplied overhead?

A)$21,520 underapplied
B)$13,600 underapplied
C)$7,920 overapplied
D)$0

Question 65

In a traditional job order costing system,the issue of indirect materials to a production department increases: (CPA adapted)

A)Stores control.
B)Work-in-Process control.
C)Factory overhead control.
D)Factory overhead applied.

Question 66

Birk Co.uses a job order costing system.The following debits (credits)appeared in Birk's work-in-process account for the month of April: Birk applies overhead to production at a predetermined rate of 80% of direct labor cost.Job No.5,the only job still in process on April 30 has been charged with direct labor of $2,000.What was the amount of direct material charged to Job No.5? (CPA adapted)

A)$3,000
B)$5,200
C)$8,800
D)$24,000

Question 67

What is the value of the ending Work-in-Process inventory balance?

A)$-0-
B)$4,200
C)$7,500
D)$8,000

Question 68

The following are Mill Co.'s production costs for October: What amount of costs should be traced to specific products in the production process? (CPA adapted)

A)$194,000
B)$190,000
C)$100,000
D)$90,000

Question 69

What is the ending balance in the Direct Materials Inventory on June 30?

A)$6,000
B)$10,500
C)$11,000
D)$15,000

Question 70

Scottso Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much overhead would be applied to production?

A)$266,400.
B)$274,320.
C)$279,607.
D)$287,920.

Question 71

What is the amount of the materials purchased?

A)$14,400
B)$16,400
C)$18,000
D)$19,600

Question 72

What is the value of the beginning Finished Goods Inventory?

A)$-0-
B)$4,200
C)$13,300
D)$21,700

Question 73

Which of the following approaches allocates overhead by multiplying an actual overhead rate $\times$ actual activity?

A)Actual costing
B)Normal costing
C)Regression costing
D)Standard costing

Question 74

Which of the following approaches allocates overhead by multiplying a predetermined rate $\times$ standard activity?

A)Actual costing
B)Normal costing
C)Regression costing
D)Standard costing

Question 75

Which of the following approaches allocates overhead by multiplying a predetermined overhead rate $\times$ actual activity?

A)Actual costing
B)Normal costing
C)Regression costing
D)Standard costing

Question 76

What is the Cost of Goods Manufactured for June?

A)$89,000
B)$84,000
C)$94,000
D)$99,000

Question 77

Scottso Corporation applies overhead using an actual costing approach.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much is the over- or underapplied overhead?

A)$21,520 underapplied
B)$13,600 underapplied
C)$7,920 overapplied
D)$0

Question 78

Scottso Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $232,750,budgeted machine-hours were 17,500.Actual factory overhead was $227,830,actual machine-hours were 16,150.How much overhead would be applied to production?

A)$214,795
B)$227,830
C)$232,750
D)$246,875

Question 79

What is the amount of direct materials purchased during June?

A)$38,000
B)$40,000
C)$42,000
D)$43,000

Question 80

How much manufacturing overhead was applied to the Work-in-Process Inventory during June?

A)$12,000
B)$15,600
C)$18,400
D)$20,500