Deck 20: Job Order Costing

Question 1

When raw materials are purchased the Work in Process Inventory account is debited.

Answer 1

False

Question 2

A process cost accounting system is appropriate for similar products that are continuously mass produced.

Answer 2

True

Question 3

Direct materials requisitioned from the storeroom should be charged to the Work In Process Inventory account and the job cost sheets for the individual jobs on which the materials were used.

Answer 3

True

Question 4

A job order cost system is most appropriate when a large volume of uniform products are produced.

Question 5

Cost accounting is primarily concerned with accumulating information about product costs.

Question 6

A company may use either a job order cost system or a process cost system but not both.

Question 7

Factory labor should be assigned to selling and administrative expenses on a proportionate basis.

Question 8

Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred.

Question 9

Job order cost sheets constitute the subsidiary ledger of the control account Work In Process Inventory.

Question 10

In a job order cost system each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets.

Question 11

A job order cost system identifies costs with a particular job rather than with a set time period.

Question 12

Manufacturing costs are generally incurred in one period and recorded in a subsequent period.

Question 13

Accumulating and assigning manufacturing costs are two important activities in a job order cost system.

Question 14

The Purchases account is credited for all raw materials purchase returns and allowances.

Question 15

When raw materials are received there is no effort at this point to associate the cost of materials with specific jobs.

Question 16

The perpetual inventory method cannot be used in a job order cost system.

Question 17

Raw Materials Inventory Factory Labor and Manufacturing Overhead are all control accounts in the general ledger when a job order cost accounting system is used.

Question 18

Recording the acquisition of raw materials is a part of accumulating manufacturing costs.

Question 19

A job order cost system and a process cost system are two alternative methods for valuing inventories.

Question 20

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

Question 21

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

A) The production of personal computers.
B) The production of automobiles.
C) The refining of petroleum.
D) The construction of a new campus building.

Question 22

Requisitions for direct materials are posted daily to the individual job cost sheets.

Question 23

A cost accounting system consists of manufacturing cost accounts that are fully integrated into the general ledger of a company.

Question 24

At the end of the year the accountant credits the amount of the overapplied overhead to Cost of Goods Sold.

Question 25

Finished Goods Inventory is charged for the cost of jobs completed during a period.

Question 26

A process cost system would most likely be used by a company that makes

A) motion pictures.
B) repairs to automobiles.
C) breakfast cereal.
D) college graduation announcements.

Question 27

The two basic types of cost accounting systems are

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

Question 28

Total manufacturing costs for a period consists of the costs of direct materials used the cost of direct labor incurred and the manufacturing overhead applied during the period.

Question 29

At the end of the year underapplied overhead is usually credited to Cost of Goods Sold.

Question 30

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

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

Question 31

Actual manufacturing overhead costs should be charged to the Work in Process Inventory account as they are incurred.

Question 32

Overapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.

Question 33

Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.

Question 34

The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity expressed in terms of a common activity base.

Question 35

There should be a separate job cost sheet for each job.

Question 36

A major purpose of cost accounting is to

A) classify all costs as operating or nonoperating.
B) measure record and report period costs.
C) provide information to stockholders for investment decisions.
D) measure record and report product costs.

Question 37

The cost of raw materials purchased is credited to Raw Materials Inventory when materials are received.

Question 38

A good system of internal control requires that the job order cost sheet be destroyed as soon as the job is complete.

Question 39

When goods are sold the Cost of Goods Sold account is debited and Work in Process Inventory account is credited.

Question 40

The formula for the predetermined overhead rate is estimated annual overhead costs divided by an expected annual operating activity.

Question 41

Process costing is not used when

A) similar goods are being produced.
B) large volumes are produced.
C) jobs have distinguishing characteristics.
D) a series of connected manufacturing processes is necessary.

Question 42

When a job is completed and all costs have been accumulated on a job cost sheet the journal entry that should be made is

A) Finished Goods Inventory Direct Materials
Direct Labor
Manufacturing Overhead
B) Work In Process Inventory Direct Materials
Direct Labor
Manufacturing Overhead
C) Raw Materials Inventory Work In Process Inventory
D) Finished Goods Inventory Work In Process Inventory

Question 43

As of December 31 2017 Stand Still Industries had $2500 of raw materials inventory. At the beginning of 2017 there was $2000 of materials on hand. During the year the company purchased $375000 of materials; however it paid for only $312500. How much inventory was requisitioned for use on jobs during 2017?

A) $362000
B) $374500
C) $375500
D) $363000

Question 44

The entry to record the acquisition of raw materials on account is

A) Work in Process Inventory Accounts Payable
B) Manufacturing Overhead Raw Materials Inventory
Accounts Payable
C) Accounts Payable Raw Materials Inventory
D) Raw Materials Inventory Accounts Payable

Question 45

Which of the following is not included in factory labor costs?

A) Gross earnings.
B) Employer payroll taxes.
C) Fringe benefits.
D) All of these are included.

Question 46

Factory labor costs

A) accumulate in advance of utilization.
B) accumulate in a control account.
C) include sick pay earned by factory workers.
D) accumulate in the Factory Labor Expense account.

Question 47

Which of the following is not a control account?

A) Manufacturing Overhead
B) Raw Materials Inventory
C) Accounts Receivable
D) All of these are control accounts

Question 48

An important feature of a job order cost system is that each job

A) must be similar to previous jobs completed.
B) has its own distinguishing characteristics.
C) must be completed before a new job is accepted.
D) consists of one unit of output.

Question 49

The flow of costs in a job order cost system

A) involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done.
B) cannot be measured until all jobs are complete.
C) measures product costs for a set time period.
D) generally follows a LIFO cost flow assumption.

Question 50

The Raw Materials Inventory account is

A) a subsidiary account.
B) debited for invoice costs and freight costs chargeable to the purchaser.
C) debited for purchase discounts taken.
D) debited for purchase returns and allowances.

Question 51

Process costing is used when

A) the production process is continuous.
B) production is aimed at filling a specific customer order.
C) dissimilar products are involved.
D) costs are to be assigned to specific jobs.

Question 52

Records of individual items of raw materials would not be maintained

A) electronically.
B) manually.
C) on stores ledger cards.
D) in the Raw Materials Inventory account.

Question 53

Manufacturing Overhead would not have a subsidiary account for

A) utilities.
B) property taxes.
C) insurance.
D) raw materials inventory.

Question 54

Factory Labor is a(n)

A) expense account.
B) control account.
C) subsidiary account.
D) temporary account.

Question 55

Kline Manufacturing has the following labor costs: $$\begin{array} { l r } \text { Factory-Gross wages } & \$ 500,000 \\\text { Factory-Net wages } & 420,000 \\\text { Employer Payroll Taxes Payable } & 50,000\end{array}$$ The entry to record the cost of factory labor and the associated payroll tax expense will include a debit to Factory Labor for

A) $550000.
B) $500000.
C) $470000.
D) $450000.

Question 56

The two major steps in the flow of costs are

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

Question 57

In a job order cost accounting system the Raw Materials Inventory account is

A) an expense.
B) a control account.
C) not used.
D) a period cost.

Question 58

Cost of raw materials is debited to Raw Materials Inventory when the

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

Question 59

All of the following would be entries in assigning accumulated costs to the Work In Process Inventory except:

A) the purchase of raw materials.
B) raw materials are used.
C) overhead is applied.
D) factory labor is used.

Question 60

Factory labor costs

A) are accumulated in a control account.
B) do not include pension costs.
C) include vacation pay.
D) are based on workers' net pay.

Question 61

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

Question 62

Which of the following shows entries only to control accounts?
a.
$\begin{array}{llr} \text { Factory Labor } &\\ \text { Factory Wages Payable } &\\\end{array}$

b.
$\begin{array}{llr} \text { Work in Process } &\\ \text { Factory Labor} &\\ \text {Raw Materials Inventory } &\\ \text {Factory Wages Payable } &\end{array}$

c.
$\begin{array}{llr} \text { Work in Process} &\\ \text { Manufacturing Overhead } &\\ \text { Raw Materials Inventory } &\end{array}$

d.
$\begin{array}{llr} \text { Factory Labor } &\\ \text { Raw Materials Inventory } &\\ \text { Accounts Payable } &\\ \text { Factory Wages Payable } &\end{array}$

Question 63

Job cost sheets constitute the subsidiary ledger for the

A) Finished Goods Inventory account.
B) Cost of Goods Sold account.
C) Work In Process Inventory account.
D) Cost of Goods Manufactured account.

Question 64

Postings to control accounts in a costing system are made

A) monthly.
B) daily.
C) annually.
D) semi-annually.

Question 65

The job cost sheet does not show

A) costs chargeable to a specific job.
B) the total costs of a completed job.
C) the unit cost of a completed job.
D) the cost of goods sold.

Question 66

A time ticket does not indicate the

A) employee's name.
B) account to be charged.
C) number of personal exemptions claimed by the employee.
D) job number.

Question 67

A copy of the materials requisition slip would not include the:

A) quantity.
B) stock number.
C) cost per unit.
D) name of the supplier.

Question 68

Under an effective system of internal control the authorization for issuing materials is made

A) orally.
B) on a prenumbered materials requisition slip.
C) by the accounting department.
D) by anyone on the production line.

Question 69

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

A) 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.
B) It is used to track manufacturing overhead costs to specific jobs.
C) It is used by management to understand how direct costs affect profitability.
D) It is a daily form that management uses for tracking worker productivity on which employee raises are based.

Question 70

As of December 31 2017 Nilsen Industries had $2000 of raw materials inventory. At the beginning of 2017 there was $1600 of materials on hand. During the year the company purchased $354000 of materials; however it paid for only $314000. How much inventory was requisitioned for use on jobs during 2017?

A) $354400
B) $344400
C) $343600
D) $353600

Question 71

Madison Inc. uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2017 totaled $18000 of materials $9000 of direct labor costs and $6000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $15000 and the ending balance is $9000. During the year the company completed 25 machines. How much is the cost per machine?

A) $1080
B) $1560
C) $1320
D) $1920

Question 72

If the entry to assign factory labor showed only a debit to Work In Process Inventory then all labor costs were

A) direct labor.
B) indirect labor.
C) overtime related.
D) regular hours.

Question 73

Materials requisition slips are costed

A) by production supervisors.
B) by factory personnel who work on the production line.
C) after the goods have been sold.
D) using any of the inventory costing methods.

Question 74

The following information is available for completed Job No. 402: Direct materials $120000; direct labor $180000; manufacturing overhead applied $90000; units produced 5000 units; units sold 4000 units. The cost of the finished goods on hand from this job is

A) $60000.
B) $390000.
C) $78000.
D) $312000.

Question 75

The principal accounting record used in assigning costs to jobs is

A) a job cost sheet.
B) the cost of goods manufactured schedule.
C) the Manufacturing Overhead control account.
D) the stores ledger cards.

Question 76

Cost of goods manufactured equals $85000 for 2017. Finished goods inventory is $2000 at the beginning of the year and $5500 at the end of the year. Beginning and ending work in process for 2017 are $4000 and $5000 respectively. How much is cost of goods sold for the year?

A) $87500
B) $83000
C) $81500
D) $88500

Question 77

Sportly Inc. completed Job No. B14 during 2017. The job cost sheet listed the following: $$\begin{array} { l r } \text { Direct materials } & \$ 110,000 \\\text { Direct labor } & \$ 60,000 \\\text { Manufacturing overhead applied } & \$ 40,000 \\\text { Units produced } & 3,000 \text { units } \\\text { Units sold } & 1,800 \text { units }\end{array}$$ How much is the cost of the finished goods on hand from this job?

A) $210000
B) $126000
C) $ 84000
D) $102000

Question 78

A materials requisition slip showed that direct materials requested were $66000 and indirect materials requested were $9000. The entry to record the transfer of materials from the storeroom is a.
$\begin{array}{llr} \text { Work In Process Inventory } &66,000\\ \text { Raw Materials Inventory } &&66,000\\\end{array}$

b.
$\begin{array}{llr} \text { Direct Materials } &66,000\\ \text { Indirect Materials } &9,000\\ \text { Work In Process Inventory } &&75,000\end{array}$

c.
$\begin{array}{llr} \text { Manufacturing Overhead } &75,000\\ \text { Raw Materials Inventory } &&75,000\\\end{array}$

d.
$\begin{array}{llr} \text { Work In Process Inventory } &66,000\\ \text {Manufacturing Overhead } &9,000\\ \text { Raw Materials Inventory } &&75,000\end{array}$

Question 79

Time tickets should be approved by

A) the audit committee.
B) co-workers.
C) the employee's supervisor.
D) the payroll department.

Question 80

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

A) Raw materials receiving slips.
B) Materials purchase orders.
C) Labor time tickets.
D) Finished goods shipping documents.