Deck 3: Job Costing

Question 1

Which of the following is an example of an industry that would use a process costing-rather than a job costing-system?

A)Brugman Custom Cabinetry
B)Computer Repair
C)Pepsi
D)Smith & Zu Certified Public Accountants

Answer 1

C

Question 2

Which of the following industries would be most likely to use a job costing system?

A)Chemicals
B)Food and beverage
C)Commercial building construction
D)Pharmaceuticals

Answer 2

C

Question 3

A paper mill company like International Paper would most likely use job costing.

Answer 3

False

Question 4

Generally Accepted Accounting Principles (GAAP)mandates the type of product costing system (job costing or process costing)that must be used by a manufacturer.

Question 5

Job costing should only be used by manufacturers.

Question 6

Companies use job costing when their products or services vary in terms of materials needed, time required to complete the product, and/or the complexity of the production process.

Question 7

Which product costing system would better account for a unique product?

A)Overhead costing system
B)Job costing system
C)Process costing system
D)Product costing system

Question 8

A receiving report is typically a duplicate of the purchase order but without the prices and quantities pre-listed on the form.

Question 9

Companies should always use job costing rather than process costing.

Question 10

A job costing system can be used by which types of companies?

A)Manufacturing and merchandising businesses
B)Service and manufacturing businesses
C)Service, manufacturing, and merchandising businesses
D)Service and merchandising businesses

Question 11

Which of the following is an example of an industry that would use a process costing-rather than a job costing-system?

A)Coca-Cola
B)Boeing Jets
C)Centex Custom Homes
D)Snyder & Lewis, Attorneys at Law

Question 12

Process costing is used by companies that produce large numbers of identical units of production in a continuous fashion.

Question 13

Job costing is often used by professional service providers, such as law firms.

Question 14

All manufacturers use either a pure process costing system or a pure job costing system.

Question 15

Which product costing system would be better for custom-order products?

A)Product costing system
B)Company costing system
C)Job costing system
D)Overhead costing system

Question 16

The end goal of process costing and job costing at a manufacturing company is the same: to find the cost of producing one unit of product.

Question 17

Job costing systems accumulate the costs for each individual job.

Question 18

A food and beverage company like Coca-Cola would most likely use job costing.

Question 19

The two basic types of costing systems are

A)product costing and materials inventory costing.
B)periodic costing and perpetual costing.
C)job costing and process costing.
D)periodic costing and process costing.

Question 20

Which of the following is most likely NOT to use process costing?

A)DuPont Chemical
B)Exxon-Mobile (gasoline)
C)Ashley Custom Furnishings
D)General Mills (cereal)

Question 21

At a manufacturing company, inventory flows from work in process inventory, to raw materials inventory, to finished goods inventory.

Question 22

When the products are shipped to customers, the cost of manufacturing those products becomes Cost of Goods Sold (COGS)shown on the company's balance sheet.

Question 23

A production schedule indicates the quantity and types of inventory that are scheduled to be manufactured during the period.

Question 24

A manufacturer of plywood would use what type of product costing system?

A)Process costing
B)Job costing
C)Either job or process
D)Both job and process

Question 25

For a manufacturing system, inventory flows from raw materials inventory to work in process inventory to finished goods inventory.

Question 26

An example of an industry that uses process costing might be a

A)custom printer.
B)homebuilder.
C)shipbuilder.
D)company that makes cement.

Question 27

Job order costing might be used by a

A)candy manufacturer.
B)custom home builder.
C)crude oil refinery.
D)cereal maker.

Question 28

Which of the following types of costing is used for many similar products?

A)Process costing
B)Batch costing
C)Service costing
D)Job costing

Question 29

When raw materials are transferred out of the storeroom to the factory, their cost is transferred out of raw materials inventory and into work in process inventory.

Question 30

A job cost record is a document that accumulates direct materials costs, direct labor costs and manufacturing overhead costs assigned to each individual job.

Question 31

________ is the system for assigning costs to unique cost objects.

A)Time costing
B)Process costing
C)Job costing
D)Service costing

Question 32

A labor time record identifies the employee and the amount of time the employee spent on a particular job.

Question 33

The quantities of incoming shipments of raw materials are counted and recorded on a purchase order.

Question 34

A purchase order is used to order needed materials from suppliers.

Question 35

A manufacturer of luxury yachts would use which type of costing system?

A)Process costing
B)Job costing
C)Either job or process
D)Both job and process

Question 36

A production schedule always covers a one-year period of time.

Question 37

Briefly explain the difference between job order and process costing and give examples of each.

Question 38

A ________ is used to accumulate the costs of a job.

A)labor time record
B)materials inventory requisition form
C)bill of materials
D)job cost record

Question 39

Which of these documents authorizes the purchase of specific raw materials from a specific supplier?

A)Labor time record
B)Materials inventory requisition form
C)Job cost record
D)Purchase order

Question 40

The bill of materials lists all of the raw materials needed to manufacture the job.

Question 41

For a manufacturer that uses job costing, show the order of the cost flow through the following accounts by numbering them from 1 to 4.
____ finished goods inventory
____ raw materials inventory
____ cost of goods sold
____ work in process inventory

Question 42

In the flow of costs, which of the following comes first?

A)Cost of goods sold
B)Finished goods inventory
C)Work in process inventory
D)Raw materials inventory

Question 43

Which of these documents informs the storeroom to send specific materials to the factory floor?

A)Receiving report
B)Bill of materials
C)Purchase order
D)Materials requisition

Question 44

The ________ substantiates the balance of the raw materials inventory account shown on the company's balance sheet.

A)bill of materials
B)raw materials records
C)materials requisition
D)labor time record

Question 45

Manufacturing overhead costs cannot be directly traced to jobs.

Question 46

When direct materials are requisitioned, they flow directly into

A)cost of goods sold.
B)finished goods inventory.
C)work in process inventory.
D)manufacturing overhead.

Question 47

For each of the following items, determine whether it would be more appropriate to increase

A)manufacturing overhead or
B)work in process inventory. Enter either the letter A or the letter B on the line in front of each statement.
____ indirect materials used
____ direct materials used
____ indirect labor used
____ direct labor used
____ plant utilities

Question 48

In the flow of costs, which of the following comes second?

A)Cost of goods sold
B)Finished goods inventory
C)Work in process inventory
D)Raw materials inventory

Question 49

Manufacturing overhead may include depreciation on the factory plant and equipment, utilities to run the plant, property taxes and insurance on the plant, and salaries of plant janitors.

Question 50

In the flow of costs, which of the following comes last?

A)Finished goods inventory
B)Cost of goods sold
C)Raw materials inventory
D)Work in process inventory

Question 51

An internal request for raw materials calls for a ________ to be completed.

A)materials requisition
B)bill of materials
C)purchase order
D)labor time record

Question 52

A ________ is a document which is prepared by manufacturing personnel to request materials for the production process.

A)cost ticket
B)job cost record
C)materials requisition
D)manufacturing ticket

Question 53

Generally accepted accounting principles (GAAP)mandate that manufacturing overhead must be treated as an inventoriable product cost for financial reporting purposes.

Question 54

The assignment of direct and indirect materials to cost objects reduces

A)finished goods inventory.
B)raw materials inventory.
C)manufacturing overhead.
D)work in process inventory.

Question 55

Briefly explain the cost flow of materials through a job costing system from the purchase to the sale.

Question 56

Payroll costs for factory employees who do not work directly on the product are considered

A)direct labor.
B)selling expenses.
C)manufacturing overhead.
D)administrative costs.

Question 57

A ________ is a source document for tracking employee hours.

A)labor time record
B)process costing
C)job cost record
D)job costing

Question 58

In the flow of costs, which of the following comes third?

A)Finished goods inventory
B)Cost of goods sold
C)Raw materials inventory
D)Work in process inventory

Question 59

What is a document that accumulates job costs called?

A)Bill of materials
B)A job cost record
C)Labor time record
D)Production schedule

Question 60

When used, raw materials

A)would be classified as direct materials.
B)would be classified as direct labor.
C)would be classified as indirect materials.
D)cannot be determined with the information provided.

Question 61

Manufacturers follow four steps to implement a manufacturing overhead allocation system. The first step is to estimate the total manufacturing overhead costs for the coming year.

Question 62

Manufacturers follow four steps to implement a manufacturing overhead allocation system. The last step is

A)allocate some manufacturing overhead to each individual job.
B)select an allocation base and estimate the total amount that will be used during the year.
C)estimate total manufacturing overhead costs for the coming year.
D)calculate a predetermined manufacturing overhead rate.

Question 63

The key to allocating indirect manufacturing costs to jobs is to identify an appropriate allocation base.

Question 64

Assigning manufacturing overhead costs and other indirect costs is called

A)cost driver.
B)cost allocation.
C)materials requisition.
D)predetermined manufacturing overhead rate.

Question 65

Manufacturers follow four steps to implement a manufacturing overhead allocation system. What is the first step?

A)Select an allocation base and estimate the total amount that will be used during the year.
B)Allocate some manufacturing overhead to each individual job.
C)Calculate a predetermined manufacturing overhead rate.
D)Estimate total manufacturing overhead costs for the coming year.

Question 66

The predetermined manufacturing overhead rate is calculated by multiplying the total estimated manufacturing overhead costs by the total estimated amount of the allocation base.

Question 67

Manufacturing overhead is allocated on the basis of

A)machine hours.
B)direct labor hours.
C)direct labor costs.
D)any of the listed choices.

Question 68

When is the predetermined manufacturing overhead rate computed?

A)During the period
B)Before the period starts
C)At the end of the period
D)Can be done at any time

Question 69

Allocating manufacturing overhead to jobs simply means "splitting up" the total manufacturing overhead costs among the jobs produced during the year.

Question 70

Allocating manufacturing overhead costs is done

A)during the period.
B)before the period starts.
C)at the end of the period.
D)never.

Question 71

Manufacturers follow four steps to implement a manufacturing overhead allocation system. The last step is to estimate the total amount of manufacturing overhead costs for the year.

Question 72

An equal amount of manufacturing overhead should be allocated to each job.

Question 73

The cost of wages paid to assembly-line workers should be treated as a manufacturing overhead cost.

Question 74

A(n)________ is an estimated manufacturing overhead rate computed before the year begins.

A)cost allocation
B)cost driver
C)predetermined manufacturing overhead rate
D)actual manufacturing overhead rate

Question 75

The overhead allocation base should be the cost driver of manufacturing overhead costs.

Question 76

What is the primary factor causing a "cost" called?

A)Cost driver
B)Cost allocation
C)Materials requisition
D)Predetermined manufacturing overhead rate

Question 77

The first three steps to allocating manufacturing overhead are taken before the year begins and include all of the following except

A)estimating total manufacturing overhead costs for the coming year.
B)selecting an allocation base and estimating the total amount that will be used during the year.
C)allocating some manufacturing overhead to each individual job.
D)calculating the predetermined manufacturing overhead rate.

Question 78

Manufacturers follow four steps to implement a manufacturing overhead allocation system. Which step is not performed before the year begins?

A)Allocate some manufacturing overhead to each individual job.
B)Select an allocation base and estimate the total amount that will be used during the year.
C)Estimate total manufacturing overhead costs for the coming year.
D)Calculate a predetermined manufacturing overhead rate.

Question 79

Manufacturers follow four steps to implement a manufacturing overhead allocation system. The last step is to allocate some manufacturing overhead to each individual job.

Question 80

The predetermined manufacturing overhead rate is calculated by dividing the total estimated manufacturing overhead costs by the total estimated amount of the allocation base.