Deck 3: Job Order Costing

Question 1

The perpetual inventory method is used in a cost accounting system.

Answer 1

True

Question 2

When raw materials are purchased, the Raw Materials Inventory account is credited.

Answer 2

False

Question 3

Cost accounting is primarily concerned with allocating overhead.

Answer 3

False

Question 4

The stores ledger cards represent the subsidiary ledger for the Finished Goods Inventory control account in the general ledger.

Question 5

A job order cost system identifies costs with a particular activity within the production process, such as mixing, or cutting.

Question 6

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of manufacturing overhead.

Question 7

Companies generally use a variation of either a job order cost system or a process cost system.

Question 8

The Work in Process Inventory account is a subsidiary of the job order cost sheets control account.

Question 9

Raw Materials Inventory, Work in Process, and Finished Goods are all inventory accounts used in the general ledger when a job order cost accounting system is used.

Question 10

Factory labour is accumulated using time clocks and time cards.

Question 11

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.

Question 12

A job order cost system and a process cost system are two alternative cost accounting systems.

Question 13

The acquisition of raw materials causes the work in process account to increase.

Question 14

The Raw Materials account is used to recognize all raw materials purchases, purchases returns and allowances, and freight costs related to materials.

Question 15

A job order cost system is most appropriate when products that are produced have their own distinguishing characteristics.

Question 16

A job cost accounting system is appropriate for homogeneous products that are continuously mass produced.

Question 17

Costs of jobs are recorded in the period in which the costs are paid.

Question 18

A predetermined overhead rate is used to allocate the actual costs of manufacturing overhead for the period.

Question 19

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.

Question 20

Manufacturing costs are generally recorded and incurred in the same accounting period.

Question 21

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

A)The 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 22

If over-applied overhead is considered material, it is subtracted from Work in Process upon disposal.

Question 23

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 24

If monthly financial statements are prepared, over-applied overhead is shown as an operating expense on the income statement.

Question 25

Total manufacturing costs for a period consists of the costs of direct material used, the cost of direct labour incurred, and the actual manufacturing overhead incurred during the period.

Question 26

On the financial statements at year end, all product costs could be found in raw materials, work in process, finished goods, and cost of goods sold.

Question 27

There should be a Work in Process ledger account for each job.

Question 28

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 29

Materials requisition slips indicate the receipt of materials from a supplier.

Question 30

What does cost accounting measure, record, and report?

A)Product costs
B)Future costs
C)Manufacturing processes
D)Managerial accounting decisions

Question 31

When a job is completed, its cost is removed from the Work in Process Inventory account and added to Cost of Goods Sold.

Question 32

Actual manufacturing overhead costs are recorded in the respective manufacturing overhead expense account as incurred.

Question 33

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 34

Actual manufacturing overhead costs should be added as a cost to the specific jobs as the costs are incurred.

Question 35

A company using a computerized accounting system gets job cost information more quickly than provided through a manual system.

Question 36

Over-applied overhead means that actual manufacturing overhead costs were less than the manufacturing overhead costs allocated to jobs.

Question 37

The transfer of direct materials to the production area causes an increase in work in process.

Question 38

To calculate a predetermined overhead rate, you must multiply the actual activity level by the estimated annual overhead costs.

Question 39

As manufacturing overhead is incurred, it is added to the individual job.

Question 40

When goods are completed, the Finished Goods account is debited and the Work in Process Inventory account is credited.

Question 41

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 42

When a job is completed, what happens to the cost of the job?

A)It is removed from work in process and included in cost of goods sold.
B)It is removed from finished goods and included in cost of goods sold.
C)It is removed from materials inventory and included in work in process.
D)It is removed from work in process and included in finished goods.

Question 43

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 44

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

Question 45

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 46

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 47

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 48

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 49

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 50

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 51

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 52

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.

Question 53

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 54

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 55

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 56

Which one of the following correctly describes job order costing?

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

Question 57

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 overheat?

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

Question 58

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)Soda bottling plant where each type of soda is produced in a separate batch

Question 59

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 60

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 61

Halitosis Company completed job 45 at a cost of $43,765 and later sold it for $90,000 cash.Which one of the following is one effect of selling the job?

A)Debit Finished Goods Inventory $90,000
B)Credit Finished Goods Inventory $43,765
C)Credit Finished Goods Inventory $90,000
D)Debit Finished Goods Inventory $43,750

Question 62

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?

Question 63

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 64

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 65

What journal entry should be made when a job is completed and all costs have been accumulated on a job cost sheet?

A)A debit to Finished Goods Inventory, and a credit to Work in Process Inventory
B)A debit to Work in Process Inventory, and a credit to Direct Materials, Direct Labour, and Manufacturing Overhead
C)A debit to Finished Goods Inventory and a credit to Direct Materials, Direct Labour, and Manufacturing Overhead
D)A debit to Cost of Goods Sold Inventory, and a credit to Work in Process Inventory

Question 66

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 67

What is another name for the stores ledger cards?

A)The job cost records
B)Purchase requisitions
C)The Work in Process control account
D)Raw Materials inventory records

Question 68

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 69

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 70

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 71

Marion Manufacturing has the following labour costs: 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 72

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 73

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 74

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 75

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 76

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 77

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 78

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

A)In the stores ledger cards
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 79

Where would you expect to find overhead applied in the monthly financial statements?

A)An operating expense
B)Assigned to a product account
C)A deduction of raw materials inventory
D)A liability

Question 80

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