Deck 3: Job Costing

Question 1

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)

Answer 1

C

Question 2

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

Answer 2

True

Question 3

Companies should always use job costing rather than process costing.

Answer 3

False

Question 4

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 5

Job costing systems accumulate the costs for each individual job.

Question 6

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 7

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 8

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 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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 15

Job costing should only be used by manufacturers.

Question 16

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

Question 17

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 18

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

Question 19

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 20

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 21

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

Question 22

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 23

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

Question 24

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

Question 25

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

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

Question 26

Job order costing might be used by a

A)water bottling plant.
B)balloon manufacturer.
C)hospital.
D)saltine cracker manufacturer.

Question 27

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

Question 28

Which of the following would NOT use process costing?

A)Furniture maker
B)Mulch manufacturer
C)Paint manufacturer
D)Cement manufacturer

Question 29

Job order costing would most likely be used in which of the following companies:

A)airplane manufacturer.
B)homebuilder.
C)doctor's office.
D)all of the above would use job order costing.

Question 30

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

A)custom printer.
B)homebuilder.
C)shipbuilder.
D)company that makes bottled soft drinks.

Question 31

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

A)Process costing
B)Job costing
C)Neither job or process
D)Both job and process

Question 32

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

A)Process costing
B)Job costing
C)Neither process or job
D)Both job and process

Question 33

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 34

Process costing would be most likely used by a

A)cereal company.
B)salsa company.
C)soft drink manufacturer.
D)all of the above would use process costing.

Question 35

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

Question 36

Job order costing might be used by a

A)greeting card manufacturer.
B)custom home builder.
C)crude oil refinery.
D)paper company.

Question 37

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 38

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 39

State whether each company below would be more likely to use a job costing system or a process costing system.

A)________ custom home builder
B)________ paint manufacturer
C)________ carpet manufacturer
D)________ concrete manufacturer
E)________ jumbo jet manufacturer

Question 40

State whether each company below would be more likely to use a job costing system or a process costing system.

A)________ soft drink bottler
B)________ yacht builder
C)________ hospital
D)________ printing firm
E)________ flour mill

Question 41

In the basic flow of inventory through a manufacturing system, which of the following occurs last in the job costing system?

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

Question 42

The job cost record summarizes which of the following sets of information for each job?

A)Direct materials, direct labor, and manufacturing overhead
B)Direct materials and direct labor
C)Manufacturing overhead only
D)Indirect materials, indirect labor, and direct labor

Question 43

In the basic flow of inventory through a manufacturing system, which of the following occurs second in the job costing system?

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

Question 44

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

Question 45

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 46

In the basic flow of inventory through a manufacturing system, which of the following occurs third in the job costing system?

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

Question 47

The ________ substantiates the total 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 48

In the basic flow of inventory through a manufacturing system, which of the following occurs first in a job costing system?

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

Question 49

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

Question 50

A ________ is a document manufacturing production personnel use to request that the itemized materials be sent from the showroom into the factory.

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

Question 51

The assignment of direct and indirect materials to a cost object reduces the

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

Question 52

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

Question 53

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

Question 54

When direct materials are requisitioned, they flow directly into

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

Question 55

An internal request to transfer raw materials requires personnel to complete a

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

Question 56

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 57

A ________ is used to accumulate all of the direct materials and direct labor used on the job, as well as the manufacturing overhead allocated to the job.

A)bill of materials
B)job cost record
C)labor time record
D)production schedule

Question 58

A bill of materials indicates

A)what materials are needed to be ordered for the month.
B)what materials the production department needs on the factory floor at that specific moment in time.
C)what materials are needed to complete the job.
D)what materials are needed for the entire year.

Question 59

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 60

A ________ is a source document used to track employee hours.

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

Question 61

Manufacturers follow four steps to implement a manufacturing overhead allocation system. In the first step, the company estimates its total manufacturing overhead costs for the coming year.

Question 62

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

Question 63

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

Question 64

Payroll-related 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 65

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 of the following statements.
________ indirect materials used
________ direct materials used
________ indirect labor used
________ direct labor used
________ plant utilities

Question 66

On the line in front of each statement, enter the letter corresponding to the term that best fits that statement. You may use a letter more than once and some letters may not be used at all.
________ a bill from a supplier
________ a list of all of the raw materials needed to manufacture a job
________ system for assigning costs to a specific unit or to a small batch of products or services that pass through production steps as a distinct identifiable job
________ a written or electronic document authorizing the purchase of specific raw materials from a specific supplier
________ system for assigning costs to large numbers of identical units that usually proceed in a continuous fashion through a series of uniform production steps or processes
________ a written or electronic document that requests specific materials be transferred from the raw materials inventory storeroom to the production floor
________ a written or electronic document listing the quantity and type of raw materials received in an incoming shipment
________ a primary factor that causes a cost
________ a written or electronic document that lists the direct materials, direct labor, and manufacturing overhead costs assigned to each individual job
________ a written or electronic document that identifies the employee, the amount of time spent on a particular job, and the labor cost charged to a job

Question 67

Manufacturers follow four steps to implement a manufacturing overhead allocation system. In the last step, to the company allocates some manufacturing overhead to each individual job.

Question 68

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 69

Manufacturers follow four steps to implement a manufacturing overhead allocation system. In the last step, the company estimates the total amount of manufacturing overhead costs for the year.

Question 70

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

Question 71

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 72

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 73

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

Question 74

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 75

Manufacturing overhead costs cannot be directly traced to jobs.

Question 76

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 77

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

Question 78

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

Question 79

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

Question 80

Briefly explain the flow of inventory through a manufacturing system into a company's job costing system from the purchase of materials to the sale of the products.