Deck 3: Job Order Costing

Question 1

Which one of the following is an important feature of a job-order cost system?

A)Each must be completed before a new product order is accepted.
B)Each consists of features which distinguish it from the next.
C)Each job uses similar processes to produce.
D)Each job has characteristics similar to the next.

Answer 1

B

Question 2

For which one of the following is process costing used?

A)production of products which are unique to each customer
B)production of homes
C)production of products which are similar in nature
D)production of in-ground swimming pools for customers

Answer 2

C

Question 3

Why do most manufacturers use a perpetual inventory system?

A)It is a requirement of Revenue Canada for all Canadian companies.
B)It is a generally accepted accounting principle.
C)It is required for all manufacturers.
D)It is a characteristic of a proper cost accounting system.

Answer 3

D

Question 4

A job-order cost system

A)is most appropriate when products that are produced do not have their own distinguishing characteristics.
B)is appropriate for homogeneous products that are continuously mass produced.
C)and a process cost system are two alternative cost accounting systems.
D)identifies costs with a particular activity within the production process, such as mixing, or cutting.

Question 5

What is one of the key distinguishing features that separate a job-order costing system from a process costing system?

A)Job-order costing is best suited for small work or jobs.
B)Process costing emphasizes larger business activities.
C)Process costing is time-based whereas job-order costing is more item-specific.
D)Process costing is more item-specific whereas job-order costing is more time-based.

Question 6

Which of the following is true?

A)The acquisition of raw materials causes the Work in Process account to increase.
B)The Raw Materials account is used to recognize all raw materials purchases, purchases returns and allowances, and freight costs related to materials.
C)When raw materials are purchased, the Raw Materials Inventory account is credited.
D)The raw materials account only reflects direct materials.

Question 7

Which of the following represents the two basic types of cost accounting systems?

A)job-order and process cost systems
B)job-order and job accumulation systems
C)job-order and batch systems
D)process cost and batch systems

Question 8

Which one of the following is a major purpose of cost accounting?

A)to provide gross profit rates to managers
B)to allocate overhead costs to jobs
C)to classify all costs as direct or indirect
D)to measure, record, and report product costs

Question 9

Which one of the following would most likely use a process cost system?

A)a company that makes soup
B)a company that creates advertisement campaigns
C)a company which makes custom designed sailboats
D)a company that paints houses

Question 10

Which one of the following types of companies would most likely use a job cost system?

A)manufacturer of duct tape
B)producer of movies
C)manufacturer of pencils
D)manufacturer of petroleum

Question 11

In which type of companies is overhead applied to jobs?

A)with manufacturing and service companies
B)only companies that have labour costs associated with products
C)only manufacturing companies
D)primarily with service companies

Question 12

Which one of the following might a job-order cost system most likely attempt to calculate?

A)a cost per overhead hour
B)a cost per product produced
C)a cost per job or batch
D)a cost per dollar of revenue

Question 13

Which one of the following correctly describes job-order costing?

A)They have distinguishing characteristics.
B)A series of connected manufacturing processes is necessary.
C)Homogeneous goods are being produced.
D)Large batches are produced.

Question 14

Which are the two types of cost accounting systems?

A)a process cost system and a production cost system
B)a job cost system and a process cost system
C)a job-order cost system and a manufacturing cost system
D)a query cost system and a manufacturing cost system

Question 15

What does cost accounting measure, record, and report?

A)product costs
B)future costs
C)manufacturing processes
D)managerial accounting decisions

Question 16

Which of the following would be accounted for using a job-order cost system?

A)the production of paper clips
B)the legal representation of a client
C)the production of toothpaste
D)the production of cans of paint

Question 17

For which of the following products would a job-order costing system be appropriate?

A)steel plant which makes one type of steel
B)door and window manufacturer making products like individual windows for houses
C)cement plant where a single identical type of cement product is manufactured
D)soft drink bottling plant where each type of soft drink is produced in a separate batch

Question 18

Which of the following more closely describes job-order and process accounting differences?

A)Job-order costing is best used when there are more material costs than labour costs involved.
B)Process costing assigns costs to departments while job-order costing assigns costs to jobs.
C)Process costing emphasizes the application of overheads more than job-order costing.
D)Job-order costing emphasizes the application of overheads more than process costing.

Question 19

Which one of the following is one of the components of cost accounting?

A)It requires GAAP to be applied.
B)It requires cost minimizing principles.
C)It involves measuring product costs.
D)It involves the determination of company profits.

Question 20

Which one of the costs below is NOT considered part of direct labour costs?

A)employer payroll taxes on factory workers
B)gross earnings of the general manager of the plant
C)gross earnings of factory workers
D)fringe benefits

Question 21

Which of the following is true?

A)In a job-order cost system, each entry to the Raw Material Inventory account should be accompanied by a posting to one or more job cost sheets.
B)When direct materials are requisitioned from the storeroom, the cost of the materials should be removed from the Work in Process Inventory account and added to the job cost sheets for the individual jobs on which the material was used.
C)Materials requisition slips indicate the receipt of materials from a supplier.
D)Upon purchase of raw materials there is no attempt to associate the cost of materials with specific jobs or orders.

Question 22

A company completed all postings for its job costs for the year.Which of the following should have the same totals at year end?

A)the cost of materials purchased and the total of the Raw Materials Inventory control account
B)the total of the amount in the Work in Process subsidiary ledger and the Work in Process Inventory control account total
C)the total of the accounts in the Work in Process subsidiary ledger and the Raw Materials Inventory control account total
D)the cost of materials charged to Work in Process Inventory and the total of the accounts in the Work in Process subsidiary ledger

Question 23

Which of the following is true?

A)The Work in Process Inventory account is a subsidiary of the job-order cost sheets control account.
B)There should be a Work in Process ledger account for each job.
C)The transfer of direct materials to the production area causes an increase in work in process.
D)The Work in Process inventory account includes actual rather than applied manufacturing overhead.

Question 24

Which one of the following is a procedure as part of assigning manufacturing costs in a job-order cost system?

A)adding manufacturing overhead costs to Work in Process as they are incurred
B)transferring the costs of completed goods out of Finished Goods
C)adding actual manufacturing overhead costs to jobs
D)adding direct materials costs to Work in Process as the materials are used

Question 25

In what manner does a company most likely maintain its records of individual items of raw materials?

A)using a bar coding system
B)in the Work in Process Inventory control account
C)in the Raw Materials Inventory account in the general ledger
D)in each of the separate job cost records

Question 26

Which one of the following is an example of an activity associated with job-order cost flow?

A)having a supervisor responsible for specific inventory functions within the manufacturing process
B)using a job cost accountant to verify accounting records
C)assigning costs to cost of goods sold
D)using inventory item descriptions to track inventory costs

Question 27

When a job or goods are completed,

A)its cost is removed from the Work in Process Inventory account and added to Cost of Goods Sold.
B)the Finished Goods account is debited and the Work in Process Inventory account is credited.
C)its costs are removed from the Finished Goods account and added to Cost of Goods Sold.
D)the Cost of Goods Sold account is debited and the Work in Process account is credited.

Question 28

Which one of the following is NEVER part of recording the issuance of raw materials in a job-order cost system?

A)debit Work in Process Inventory
B)debit Finished Goods Inventory
C)debit Manufacturing Overhead
D)credit Raw Materials Inventory

Question 29

At what point in time are costs of raw materials debited to Work in Process Inventory?

A)when the materials are put into production
B)when the bill for the materials is paid
C)when the materials are ordered
D)when the materials are received

Question 30

At the point that manufacturing labour costs are incurred, to what account are they debited?

A)Work in Process
B)Factory Wages Expense
C)Factory Labour
D)Factory Wages Payable

Question 31

What are the two major steps in the flow of costs for a job cost system?

A)accumulating and assigning
B)allocating and assigning
C)acquiring and accumulating
D)accumulating and allocating

Question 32

Factory labour costs

A)omit holiday pay.
B)are equal to the total amounts of the pay cheques the employees receive.
C)are debited to work in process when incurred.
D)include benefits for employees.

Question 33

In a job-order cost accounting system, the Work in Process account is

A)closed at year end.
B)a period cost.
C)an expense.
D)a control account.

Question 34

What is another name for an accounting record of a job?

A)a job cost record
B)a job cost sheet
C)the Work in Process control account
D)Raw Materials inventory records

Question 35

Which one of the following would most likely be a subsidiary account for Manufacturing Overhead?

A)Insurance
B)Raw Materials Inventory
C)Work in Process
D)Finished Goods

Question 36

Which of the following statements regarding the Raw Materials Inventory account is correct?

A)Freight costs related to acquiring materials are credited.
B)Purchase returns and allowances are debited.
C)The invoice cost of purchasing materials is debited.
D)Any purchase discounts taken are debited.

Question 37

What transaction is recorded when direct labour is assigned to jobs?

A)a debit to Work in Process Inventory and a credit to Factory Labour
B)a debit to Manufacturing Overhead and a credit to Factory Labour
C)a debit to Factory Labour and a credit to Manufacturing Overhead
D)a debit to Factory Labour and a credit to Work in Process Inventory

Question 38

Which one of the following describes factory labour?

A)It is debited to Manufacturing Overhead when incurred.
B)It is debited to jobs as they are completed.
C)It is an inventory account in a job cost system.
D)It is assigned to Work in Process or Manufacturing Overhead.

Question 39

What is unique about the flow of costs in a job-order cost system?

A)Each job is costed separately in a Work in Process subsidiary ledger.
B)It involves accumulating material, labour, and manufacturing overhead costs as they are incurred in order to determine the job cost.
C)Job costs cannot be measured until all overhead costs are determined.
D)There are no costs remaining in Work in Process at year end.

Question 40

If a manufacturing company acquires raw materials, to what account is the cost of raw materials purchased debited?

A)Raw Materials Purchases
B)Raw Materials Inventory
C)Purchases
D)Work in Process

Question 41

To which control account do job cost sheets represent the subsidiary ledger?

A)Cost of Goods Sold
B)Cost of Goods Manufactured
C)Work in Process Inventory
D)Finished Goods Inventory

Question 42

How is the authorization for issuing materials made when an effective system of internal control is in place?

A)by utilizing pre-numbered materials requisition slips
B)by acquiring the materials from the delivery driver when the shipment is received from a trucking company
C)by receiving authorization to begin a job from the production supervisor
D)by approval from the accounting department

Question 43

Which of the following will you find on a labour time ticket?

A)total labour cost to be charged to job for the respective time ticket
B)cost of materials requisitioned for the job
C)estimated labour cost total for a job
D)total labour cost incurred to date for a job

Question 44

A materials requisition slip showed that total materials requested were $21,250 with $750 of this amount consisting of indirect materials.What entry is made to record the transfer of materials from the storeroom? a)
$\begin{array}{cc} \text {Work in Process Inventory } &20,500\\ \text { Manufacturing Overhead } &750\\ \text {Raw Materials Inventory } &&21,250\\\end{array}$
b)
$\begin{array}{cc} \text { Work in Process Inventory } &21,250\\ \text { Raw Material Inventory } &&21,250\\\end{array}$
c)
$\begin{array}{cc} \text { Direct Materials} &20,500\\ \text { Indirect Materials} &750\\ \text { Work in Process Inventory } &&21,250\\\end{array}$
d)
$\begin{array}{cc} \text { Manufacturing Overhead } &21,250\\ \text { Raw Materials Inventory } &&21,250\\\end{array}$

Question 45

Which one of the following best describes a job cost sheet?

A)It is used by management to understand how direct costs affect profitability.
B)It is a daily form that management uses for tracking worker productivity on which employee raises are based.
C)It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job.
D)It is used to track manufacturing overhead costs to specific jobs.

Question 46

Which one of the following is a source document that impacts the job cost sheet?

A)labour time tickets
B)finished goods shipping documents
C)raw material receiving slips
D)material purchase orders

Question 47

Which of the following is true of materials requisition slips?

A)They are prepared after the goods have been sold.
B)They trigger a transaction which increases finished goods.
C)They may indicate indirect materials used in production.
D)They indicate receipt of materials from the supplier.

Question 48

Which one of the following contains sources of costs that will be added to job cost sheets?

A)invoices, time tickets, and the predetermined overhead rate
B)materials requisition slips, time tickets, and the actual overhead costs
C)materials requisition slips, payroll register, and the predetermined overhead rate
D)materials requisition slips, time tickets, and the predetermined overhead rate

Question 49

Marion Manufacturing has the following labour costs: $\begin{array}{cc} \text {Factory-Gross wages } &\$282,000\\ \text { Factory - Net wages} &236,000\\ \text { Emplover Pavroll Taxes Pavable} &46,000\\\end{array}$
How much should Marion debit to Factory Labour to record these amounts?

A)$518,000
B)$328,000
C)$282,000
D)$564,000

Question 50

Which one of the following appears on the job cost sheet?

A)the cost to date of all completed jobs
B)the total materials purchased during the year
C)direct materials chargeable to a specific job
D)the total cost of goods sold

Question 51

Which is most often used in a job-order cost system?

A)general ledger accounts only
B)subsidiary accounts only
C)control accounts and subsidiary accounts
D)master accounts and design accounts

Question 52

How often are postings to subsidiary accounts in a costing system made?

A)at the end of every accounting period
B)monthly
C)daily
D)weekly

Question 53

As of December 31, 2020, GloryBe Industries had $1,000 of raw materials inventory.At the beginning of 2020, there was $800 of materials on hand.During the year, the company purchased $122,000 of materials, however paid for only $117,000.How much inventory was requisitioned for use on jobs during 2020?

A)$122,200
B)$117,200
C)$116,800
D)$121,800

Question 54

Samari Company prepared the entry to assign factory labour to jobs.The costs incurred included direct labour.Which account was debited?

A)Manufacturing Labour
B)Finished Goods Inventory
C)Work in Process Inventory
D)Factory Labour

Question 55

How is the employee time ticket used?

A)It is kept as evidence of payment to employees.
B)It is used only by the production supervisor to track which employees show up for work.
C)It is used as a basis for determining the cost of labour to add to jobs.
D)It is only sent to the accounting department to create pay cheques for employees.

Question 56

Which transaction is used to recognize the acquisition of raw materials on account?

A)debit to Accounts Payable and credit to Raw Materials Inventory
B)debit to Raw Materials Inventory and credit to Accounts Payable
C)debit to Work in Process Inventory and credit to Accounts Payable
D)debit to Manufacturing Overhead, debit to Raw Materials Inventory, and credit to Accounts Payable

Question 57

What is the primary role of a job cost sheet?

A)It lists the materials on hand available to be used for jobs.
B)It is the primary accounting record used in assigning costs to jobs.
C)It is used instead of a cost of goods manufactured schedule.
D)It shows the detail of the Manufacturing Overhead Control account.

Question 58

Which statement is true with regard to factory labour costs?

A)It represents the net amount paid to factory workers for work on jobs.
B)It is added to the Factory Labour account and later assigned to work in process or manufacturing overhead.
C)These costs are accrued before incurred.
D)Amounts incurred during a particular year that have not been allocated to jobs are carried over to the next year.

Question 59

When determining costs of jobs, how does a company account for indirect material?

A)It is transferred out of Raw Materials into Manufacturing Overhead when used.
B)It is transferred out of Raw Materials into Work in Process as used.
C)It is added to Work in Process as used.
D)It remains part of Raw Materials Inventory.

Question 60

A company incurred indirect labour related to production jobs during 2020.Which account should increase as a result of this cost being incurred?

A)Manufacturing Overhead
B)Operating Expenses
C)The specific jobs recorded on the respective time ticket
D)The Factory Labour account

Question 61

What are the two components of a predetermined overhead rate?

A)actual monthly costs and actual annual activity
B)estimated monthly costs and actual monthly activity
C)estimated annual costs and actual activity
D)estimated annual costs and expected annual activity

Question 62

Harna, Inc.uses a job-order cost system.During the year the company decreased Manufacturing Overhead by $300,000.Which of the following most likely should be recorded at the same time?

A)a debit to Work in Process Inventory
B)a credit to Raw Materials Inventory
C)a debit to Cost of Goods Manufactured
D)a credit to Finished Goods Inventory

Question 63

Which one of the following is used to calculate the predetermined overhead rate?

A)applied overhead costs
B)actual overhead costs
C)predetermined overhead costs
D)estimated overhead costs

Question 64

Why is it necessary to estimate the annual overhead costs and annual operating activity when calculating the predetermined overhead rate?

A)Cost benefit analysis indicates that it is too expensive to gather actual costs.
B)The predetermined overhead rate is only used for internal reporting, and does not need to equal the higher standards required for external reporting.
C)In order to obtain timely information, companies cannot wait for actual costs to be determined.
D)all of the above

Question 65

Of the three manufacturing costs, which one is the most difficult to assign to a cost object?

A)direct materials
B)direct labour
C)manufacturing overhead
D)They are all equally difficult to assign.

Question 66

What is the best way to handle manufacturing overhead costs in order to get the most timely job cost information?

A)The company should account for only the direct production costs.
B)The company should apply overhead using an estimated rate throughout the year.
C)The company should add actual manufacturing overhead costs to jobs as soon as the overhead costs are incurred.
D)The company should determine an allocation rate as soon as the actual costs are known, and then apply manufacturing overhead to jobs.

Question 67

Which one of the following should be equal to the balance of the Work in Process Inventory account at the end of the period?

A)the total of manufacturing overhead applied to work in process for the period
B)the total manufacturing costs for the period
C)the total of the amounts transferred from raw materials for the current period
D)the sum of the costs shown on the job cost sheets of unfinished jobs

Question 68

Several debits are made to Work in Process Inventory during the year.Which one of the following is NOT a common account that would be credited to accompany one of the debits?

A)Manufacturing Overhead
B)Factory Labour
C)Raw Materials Inventory
D)Finished Goods Inventory

Question 69

Myrna's Manufacturing calculated its predetermined overhead rate to be 200% of direct materials costs.For the month of July, the company incurred $120,000 of raw material costs, of which $90,000 were direct materials, and $30,000 were indirect materials.Actual overhead incurred was $175,000.What would be the debit entry to the Work in Process Inventory account for July with respect to manufacturing overhead?

A)$175,000
B)$180,000
C)$240,000
D)$zero, the account should be credited

Question 70

Which one of the following is used in assigning manufacturing costs to work in process inventory?

A)materials purchased invoices
B)finished goods inventory costs
C)actual manufacturing overhead
D)estimated manufacturing overhead

Question 71

Which one of the following is a common activity base used to calculate the predetermined overhead rate?

A)number of months to complete jobs
B)indirect labour costs
C)direct labour dollars
D)number of jobs completed

Question 72

For what reason have companies recently chosen machine hours as an activity base when calculating a predetermined overhead rate?

A)an increase in direct labour costs
B)it is a more reliable source than other activity bases
C)the lack of verifiable hours for direct labour
D)an increasing use of automated manufacturing operations

Question 73

Which of the following pairs are control accounts?

A)Work in Process and Manufacturing Overhead
B)Raw Materials Inventory and Wages Payable
C)Factory Labour and Wages Payable
D)Work in Process and Job Revenue

Question 74

When computing the predetermined manufacturing overhead rate, which amount below is most likely used in the numerator?

A)direct labour hours
B)estimated manufacturing overhead costs
C)actual manufacturing overhead costs
D)applied manufacturing overhead costs

Question 75

Which one of the following is a control account?

A)Utilities Expense
B)Factory Wages Payable
C)Manufacturing Overhead
D)Cost of Goods Sold

Question 76

At what point in time is the predetermined overhead rate calculated?

A)at the end of the year in which the job is in production
B)at the time each job is completed
C)at the beginning of the year
D)once actual overhead costs are incurred

Question 77

Which of the following statements is correct?

A)Both actual costing and normal costing systems trace direct costs to a cost object by using actual cost data.
B)An actual costing system is timelier than a normal costing system.
C)An actual costing system is less accurate than a normal costing system.
D)Both actual costing and normal costing systems will result in the same total cost of production per unit at all points in the production process.

Question 78

For which one of the following costs is it not possible to assign costs to jobs as they are incurred?

A)manufacturing overhead
B)direct materials
C)direct labour
D)All of these costs can be assigned based on actual costs.

Question 79

Which one of the following occurs when assigning manufacturing costs to work in process?

A)The Manufacturing Overhead account is debited.
B)The costs of completed jobs are debited to Work in Process.
C)No transactions impact the Work in Process account.
D)The Raw Materials account is credited as materials are transferred into manufacturing.

Question 80

In a normal costing system,

A)actual manufacturing overhead costs are recorded in the respective Manufacturing Overhead Expense account as incurred.
B)actual manufacturing overhead costs should be added as a cost to the specific jobs as the costs are incurred.
C)applied manufacturing overhead costs reflect debits to the manufacturing overhead account.
D)indirect costs are allocated based on the predetermined overhead rate times the actual quantity of the activity base.