Deck 3: Job-Order Cost Accounting

Question 1

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

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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

Answer 3

False

Question 4

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 5

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

Question 6

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

Question 7

Cost accounting is primarily concerned with allocating overhead.

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

Factory labour is accumulated using a time ticket.

Question 13

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 14

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

Question 15

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 16

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

Question 17

The acquisition of raw materials causes the Work in Process account to increase.

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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 24

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 25

Finished Goods Inventory is a control account that controls individual finished goods records in a Finished Goods subsidiary ledger.

Question 26

What does cost accounting measure, record, and report?

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

Question 27

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

Question 28

Actual manufacturing overhead costs are recorded in the respective Manufacturing Overhead Expense account as incurred.

Question 29

Job cost sheets are often used as a subsidiary ledger for job costs.

Question 30

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

Question 31

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

Question 32

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

Question 33

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 34

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

Question 35

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

Question 36

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 37

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

Question 38

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

Question 39

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 40

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

Question 41

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 42

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 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

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 45

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 46

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 47

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 48

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 49

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 50

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 51

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 52

Why do most manufacturers use a perpetual inventory system?

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

Question 53

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 54

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 55

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 56

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 57

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 58

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 59

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 60

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 61

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 62

Marion Manufacturing has the following labour costs: $\begin{array}{lc} \text {Factory-Gross wages } &\$282,000\\ \text { Factory-Net wages. } &236,000\\ \text { Emplover Pavroll Taxes Pavable } &46,000\\\end{array}$
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 63

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 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 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 66

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 67

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)
$\begin{array}{lr} \text { Work in Process Inventory } &20,500\\ \text {Manufacturing Overhead } &750\\ \text { Raw Materials Inventory } &&21,250\\\end{array}$
b)
$\begin{array}{lr} \text { Work in Process Inventory. } &21,250\\ \text {Raw Material Inventory. } &&21,250\\\end{array}$
c)
$\begin{array}{lr} \text { Direct Materials} &20,500\\ \text {Indirect Materials. } &750\\ \text { Work in Process Inventory } &&21,250\\\end{array}$
d)
$\begin{array}{lr} \text {Manufacturing Overhead } &21,250\\ \text { Raw Materials Inventory } &&21,250\\\end{array}$

Question 68

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 69

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 70

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 71

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 72

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 73

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 74

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 75

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 76

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 77

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 78

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 79

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 80

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.