Deck 20: Job Costing

Question 1

Alexandra's Designs,a fashion boutique,incurred the following in the month of September:
$$\begin{array} { | l | l | } \hline \text { Salaries paid to designers } & \$ 146,000 \\\hline \text { Wages paid to tailors } & 30,000 \\\hline \text { Indirect wages } & 17,000 \\\hline\end{array}$$
What is the journal entry to record the total labour charges incurred during September?

A) $$\begin{array} { | c | l | l | } \hline \text { Work in pocess inventory (direct labour) } & 193,000 & \\\hline \text { Wages payable } & & 193,000 \\\hline\end{array}$$
B) $$\begin{array} { | c | l | l | } \hline \text { Wages payable } & 193,000 & \\\hline \text { Finished goods inventory } & & 163,000 \\\hline \text { Work in pocess inventory (direct labour) } & & 30,000 \\\hline\end{array}$$
C) $$\begin{array} { | c | l | l | } \hline \text { Manufacturing overhead (indirect labour) } & 193,000 & \\\hline \text { Wages payable } & & 193,000 \\\hline\end{array}$$
D) $$\begin{array} { | c | l | l | } \hline \text { Work in process inventory (direct labour) } & 176,000 & \\\hline \text { Manufacturing overhead (indirect labour) } & 17,000 & \\\hline \text { Wages payable } & & 193,000 \\\hline\end{array}$$

Answer 1

$$\begin{array} { | c | l | l | } \hline \text { Work in process inventory (direct labour) } & 176,000 & \\\hline \text { Manufacturing overhead (indirect labour) } & 17,000 & \\\hline \text { Wages payable } & & 193,000 \\\hline\end{array}$$

Question 2

Which of the following correctly describes the term conversion costs?

A) The combination of direct plus indirect labour costs
B) The addition of labour and manufacturing overhead to materials
C) The combination of indirect labour plus indirect materials cost
D) The combination of direct materials, direct labour and manufacturing overhead costs

Answer 2

B

Question 3

Accounting firms,building contractors and healthcare providers are companies that use job order costing.

Answer 3

True

Question 4

On 1 June 2017,Dalton Productions had beginning balances as shown in the T-accounts below.
$$\begin{array} { | c | } \hline \begin{array} { c } \text { Materials } \\\text { inventory }\end{array} \\\hline 11,000 \\\hline \begin{array} { c } \text { Work in process } \\\text { inventory }\end{array} \\\hline 26,000 \\\hline \begin{array} { c } \text { Finished goods } \\\text { inventory }\end{array} \\\hline 35,000 \\\hline \begin{array} { c } \text { Manufacturing } \\\text { overhead }\end{array} \\\hline 49,000 \\\hline\end{array}$$
During June,the following transactions took place:
2 June: Issued $3100 of direct materials and $600 of indirect materials to production
13 June: Paid $8400 of direct factory labour cost and $14,700 of indirect factory labour cost
Following these transactions,what was the balance in the Manufacturing overhead account?

A) $121,700
B) $60,500
C) $52,800
D) $64,300

Question 5

Direct materials and direct labour are assigned to individual job cost records and are recorded with a debit to Work in process.

Question 6

Indirect materials issued and indirect labour costs incurred are debited to the Manufacturing overhead account.

Question 7

Job order costing is most likely used in which of the following industries?

A) Oil refinery
B) Food and beverage manufacturing
C) Medical clinic
D) Pharmaceutical manufacturing

Question 8

A process costing system is useful in which of the following circumstances?

A) Mass production of a single type of product
B) Providing specialised services
C) Production of unique products
D) Production of multiple products in separate batches

Question 9

Which of the following companies would NOT use job order costing?

A) An auto repair shop
B) A beverage manufacturer
C) A lawn maintenance company
D) A legal firm

Question 10

The entry to record the purchase of materials on account using a job order costing system would include a:

A) debit to Work in process inventory.
B) debit to Materials inventory.
C) credit to Materials inventory.
D) debit to Accounts payable.

Question 11

Which of the following statements is FALSE?

A) A job order costing system would be used by manufacturers of custom-made products.
B) A service firm would likely use a job order costing system.
C) A print and copy shop would likely use a process costing system.
D) A process costing system would be used by manufacturers of commodities, such as flour or sugar.

Question 12

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

A) Paint manufacturer
B) Music production studio
C) Custom furniture manufacturer
D) Home remodelling contractor

Question 13

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

Question 14

The journal entry to issue $530 of direct materials and $40 of indirect materials to production involves debit(s)to the:

A) Manufacturing overhead account for $570.
B) Work in process inventory account for $530 and Manufacturing overhead account for $40.
C) Work in process inventory account for $570.
D) Work in process inventory account for $530 and Finished goods inventory account for $40.

Question 15

Work in process inventory is debited for the incurrence of both direct and indirect labour in a job costing system.

Question 16

In job order costing,the journal entry to issue indirect materials to production should include which of the following?

A) Credit to Manufacturing overhead
B) Credit to Finished goods inventory
C) Credit to Work in process inventory
D) Credit to Materials inventory

Question 17

Which of the following would be included in the journal entry to record the requisition of direct materials?

A) Debit to Materials inventory
B) Debit to Finished goods inventory
C) Debit to Work in process inventory
D) Debit to Cost of sales

Question 18

Which of the following would be included in the journal entry to record the incurrence of indirect labour costs?

A) Debit to Work in process inventory
B) Debit to Finished goods inventory
C) Debit to Wages payable
D) Debit to Manufacturing overhead

Question 19

When materials are requisitioned for a job,the materials inventory account is debited.

Question 20

Indirect materials and indirect labour are tracked to individual job costing records and recorded in the Work in process account.

Question 21

Aaron Company estimates direct labour costs and manufacturing overhead costs for the coming year to be $780,000 and $500,000,respectively.Aaron allocates overhead costs based on machine hours.The estimated total labour hours and machine hours for the coming year are 10,000 hours and 8000 hours,respectively.What is the predetermined overhead allocation rate?

A) $112.50 per labour hour
B) $97.50 per machine hour
C) $50.00 per labour hour
D) $62.50 per machine hour

Question 22

Overallocation of manufacturing overhead would require which of the following year-end adjustments?

A) A credit to Finished goods inventory
B) A credit to Manufacturing overhead
C) A credit to Cost of sales
D) A debit to Work in process inventory

Question 23

Hermione Company completed Job GH6 last month.The cost details of GH6 are shown below:
$$\begin{array} { | l | l | } \hline \text { Direct labour cost } & \$ 2080 \\\hline \text { Direct materials cost } & \$ 180 \\\hline \text { Direct labour hours } & 75 \\\hline \text { Predetermined overhead allocation rate per direct labour hour } & \$ 54 \\\hline \text { Number of units of finished product } & 280 \\\hline\end{array}$$
Calculate the cost per unit of finished product of Job GH6.

A) $22.54
B) $42.14
C) $45.07
D) $43.43

Question 24

When calculating the predetermined manufacturing overhead rate,what is the correct basis of calculation?

A) Estimated overhead costs divided by the number of days in a year
B) Actual overhead costs of the prior year divided by the actual amount of the cost driver or allocation base
C) Estimated amount of the cost driver divided by the estimated total overhead costs
D) Estimated overhead costs divided by the estimated amount of the cost driver or allocation base

Question 25

The Quadrangle Fabrication Plant suffered a fire incident at the beginning of the year which resulted in loss of property,including the accounting records.Some data for the year were retrieved and extracts from it are shown below:
$$\begin{array} {| l | l | } \hline \begin{array} { l } \text { Total manufacturing overhead estimated at the beginning of the } \\\text { year }\end{array} & \$ 128,772 \\\hline \text { Total direct labour costs estimated at the beginning of the year } & \$ 189,000 \\\hline \text { Total direct labour hours estimated at the beginning of the year } & 4200 \text { direct labour hours } \\\hline \text { Actual manufacturing overhead costs for the year } & \$ 106,760 \\\hline \text { Actual direct labour costs for the year } & \$ 151,000 \\\hline \text { Actual direct labour hours for the year } & 4150 \text { direct labour hours } \\\hline\end{array}$$
The company bases its manufacturing overhead allocation on direct labour hours.How much manufacturing overhead was allocated to production during the year? (Round your intermediate calculations to two decimal places.)

A) $130,323.47
B) $127,239.00
C) $189,000
D) $128,772.00

Question 26

In a manufacturing operation,property rates and insurance for the plant should be debited to Manufacturing overhead.

Question 27

Iglesias Company completed Job 12 on 30 November.The details of Job 12 are given below:
$$\begin{array} { | l | l | } \hline \text { Direct labour cost } & \$ 910 \\\hline \text { Direct materials cost } & \$ 1140 \\\hline \text { Machine hours } & 10 \\\hline \text { Direct labour hours } & 29 \\\hline \text { Predetermined overhead allocation rate } & \$ 93 \text { per machine hour } \\\hline\end{array}$$
What is the total cost of Job 12?

A) $2050
B) $2060
C) $2980
D) $4747

Question 28

Haverhill Products just completed job number 440.In addition to direct labour and direct materials cost,Haverhill allocated $450 of manufacturing overhead to the job.Which of the following describes the correct journal entry to record the allocation of overhead to the job?

A) Debit Manufacturing overhead, credit Work in process
B) Debit Work in process, credit Manufacturing overhead
C) Debit Work in process, credit Cash
D) Debit Finished goods, credit Manufacturing overhead

Question 29

When manufacturing overhead costs are incurred,the amounts are recorded as a credit to Manufacturing overhead.

Question 30

The entry to allocate manufacturing overhead costs to Work in process requires a debit to Manufacturing overhead.

Question 31

Sybil Ltd uses a predetermined overhead allocation rate to allocate manufacturing overhead costs to jobs.The company recently completed Job 300X.This job used 19 machine hours and 1 direct labour hours.The predetermined overhead allocation rate is calculated to be $50 per machine hour.What is the amount of manufacturing overhead allocated to Job 300X using machine hours as the allocation base?

A) $950
B) $900
C) $50
D) $1000

Question 32

Underallocation of manufacturing overhead would require which of the following year-end adjustments?

A) A debit to Work in process inventory
B) A credit to Manufacturing overhead
C) A credit to Cost of sales
D) A credit to Finished goods inventory

Question 33

Which of the following correctly describes the term cost driver?

A) The total material, labour and overhead cost of a completed job
B) The inflation rate which causes costs to rise
C) The primary factor which is correlated with the amount of cost incurred to produce a product
D) The initial purchase price of direct materials

Question 34

All manufacturing overhead costs incurred are accumulated as debits to a general ledger account titled Manufacturing overhead.

Question 35

When is the predetermined manufacturing overhead rate for a given production year calculated?

A) After each job is completed
B) At the mid-point of the production year
C) Before the production year begins
D) At the end of the production year

Question 36

When manufacturing overhead is allocated,the amount is recorded as a debit to Work in process and a credit to Manufacturing overhead.

Question 37

Which of the following would NOT be considered a manufacturing overhead cost?

A) Property rates for the plant
B) Direct labour
C) Insurance for the factory
D) Indirect labour cost

Question 38

Which of the following describes the allocation base for allocating manufacturing overhead costs?

A) The factor that reflects the relationship between goods produced and the amount of overhead costs incurred
B) The estimated base amount of manufacturing overhead costs in a year
C) The formula for allocating depreciation expense over the life on an asset
D) The percentage used to allocate direct labour to work in process

Question 39

Which of the following correctly describes the predetermined manufacturing overhead rate?

A) The rate of increase in factory costs
B) The rate for factory electricity and gas costs
C) The rate used to allocate overhead to production
D) The rate of actual overhead costs per day

Question 40

Which of the following would NOT be considered a manufacturing overhead cost?

A) Indirect labour
B) Direct labour cost
C) Plant electricity and gas costs
D) Depreciation of plant equipment

Question 41

Caltran Company completed manufacturing Job 445.It included $920 of direct materials cost,$1440 of direct labour cost and $860 of allocated overhead.Which of the following is the correct journal entry needed to record the completed job?

A) $$\begin{array} { | c | l | l | } \hline \text { Work in process inventory } & 115,000 & \\\hline \text { Cost of sales } & & 115,000 \\\hline\end{array}$$
B) $$\begin{array} { | c | l | l | } \hline \text { Finished goods inventory } & 3220 & \\\hline \text { Work in process inventory } & & 3220 \\\hline\end{array}$$
C) $$\begin{array} { | c | l | l | } \hline \text { Finished goods inventory } & 3220 & \\\hline \text { Materials inventory } & & 3220 \\\hline\end{array}$$
D) $$\begin{array} { | c | l | l | } \hline \text { Work in process inventory } & 3220 & \\\hline \text { Finished goods inventory } & & 3220 \\\hline\end{array}$$

Question 42

The engineering firm of Dobbs and Smith uses a job order costing system to accumulate client-related costs.The overhead rate is 65% of direct labour cost.Staff engineer's time is charged at a rate of $100 per hour.A recent job for a client involved 30 staff labour hours.How much was the total job cost?

A) $975
B) $3000
C) $2000
D) $4950

Question 43

The cost of goods manufactured is recorded as a debit to the Work in process account.

Question 44

Altima Company finished Job A40 on the last working day of the year.It utilised $1300 of direct materials and $4600 of direct labour.Altima uses a predetermined overhead allocation rate based on percentage of direct labour costs,which has been fixed at 40%.The entry to record the completion of the job should involve a:

A) debit to Cost of sales $7740 and a credit to Finished goods inventory $7740.
B) debit to Work in process inventory $7740 and a credit to Finished goods inventory $7740.
C) debit to Finished goods inventory $7740 and a credit to Work in process inventory $7740.
D) debit to Finished goods inventory $7740 and a credit to Materials inventory $7740.

Question 45

Jorst Manufacturing began business on 1 January 2017.During its first year of operation,Jorst worked on five industrial jobs and reported the following information at year-end:
$\begin{array}{|l|c|c|c|c|c|}\hline & \text { Job } 1 & \text { Job } 2 & \text { Job } 3 & \text { Job } 4 & \text { Job } 5 \\\hline \text { Direct materials } & 17,100 & 7900 & 4100 & 3600 & 17,600 \\\hline \text { Direct labour } & 12,900 & 20,900 & 13,500 & 12,900 & 16,900 \\\hline \text { Allocated mfg, overhead } & 1800 & 6100 & 3100 & 7900 & 16,300 \\\hline\\&&&&& \text { Not}\\ \text { Job completed: } & 30 \text { Jun } & 1 \mathrm{Sep} & 15 \mathrm{Oct} & 1 \mathrm{Nov} & \text { complet } \\\hline \text { Job sold: } & 10 \mathrm{Jull} & 12 \mathrm{Sep} & \text { Not sold } & \text { Not sold } &\mathrm{N} / \mathrm{A} \\\hline \text { renues: } & 25,100 & 39,500 & \mathrm{~N} / \mathrm{A} & \mathrm{N} / \mathrm{A} &\mathrm{N} / \mathrm{A} \\\hline\end{array}$



At year-end,what was the balance in Finished goods inventory?

A) $45,100
B) $151,300
C) $47,300
D) $20,800

Question 46

Cost of sales needs to be debited at year-end when the manufacturing overhead is overallocated in order to clear the overhead account to zero.

Question 47

Dexter Accounting expects its accountants to work a total of 46,000 direct labour hours per year.Dexter's estimated total indirect costs are $598,000.Direct labour hours is the allocation base for indirect costs.What is the indirect cost allocation rate?

A) $13 per hour
B) $170 per hour
C) $130 per hour
D) $26 per hour

Question 48

On 30 June,Coraline Company finished job number 750,with total job costs of $4 600,and transferred the costs to Finished goods.On 6 July,they completed the sale of the goods to a customer for $5 100 cash.In order to record the sale,two entries are necessary,one to record revenue,and one to record cost of sales.Which of the following is the correct entry needed to record the cost of sales?

A) Debit Finished goods inventory $4 600, credit Cost of sales $4 600
B) Debit Work in process inventory $4 600, credit Cost of sales $4 600
C) Debit Cost of sales $4 600, credit Finished goods inventory $4 600
D) Debit Cost of sales $4 600, credit Work in process inventory $4 600

Question 49

Jorst Manufacturing began business on 1 January 2017.During its first year of operation,Jorst worked on five industrial jobs and reported the following information at year-end:
$\begin{array}{|l|c|c|c|c|c|}\hline & \text { Job } 1 & \text { Job } 2 & \text { Job } 3 & \text { Job } 4 & \text { Job } 5 \\\hline \text { Direct materials } & 11,400 & 7900 & 4400 & 3900 & 11,900 \\\hline \text { Direct labour } & 12,200 & 20,800 & 13,800 & 12,200 & 11,200 \\\hline \text { Allocated mfg, overhead } & 2500 & 6300 & 3100 & 7900 & 10,600 \\\hline\\&&&&& \text { Not}\\ \text { Job completed: } & 30 \text { Jun } & 1 \mathrm{Sep} & 15 \mathrm{Oct} & 1 \mathrm{Nov} & \text { complet } \\\hline \text { Job sold: } & 10 \mathrm{Jull} & 12 \mathrm{Sep} & \text { Not sold } & \text { Not sold } &\mathrm{N} / \mathrm{A} \\\hline \text { renues: } & 26,000 & 39,800 & \mathrm{~N} / \mathrm{A} & \mathrm{N} / \mathrm{A} &\mathrm{N} / \mathrm{A} \\\hline\end{array}$


At year-end,what was the balance in Work in process inventory?

A) $16,900
B) $46,100
C) $33,700
D) $37,400

Question 50

At the beginning of 2017,Conway Manufacturing had the following account balances:
$$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Work in } \\\text { process } \\\text { inventory }\end{array} &\quad\quad\quad \\\hline 2300 & \\\hline\end{array}$$
$$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Finished } \\\text { goods }\end{array} &\quad\quad\quad \\\text { inventory } & \\\hline 8600 & \\\hline\end{array}$$
$\begin{array}{|l|l|}\hline \begin{array}{l}\text { Manufacturin } \\\text { goverhead }\end{array} &\quad\quad\quad \\\hline 0 &\\\hline\end{array}$

$\begin{array}{|r|l|}\hline\text { Cost of sales } &\quad\quad\quad \\\hline 0 & \\\hline\end{array}$

$\begin{array}{|r|r|}\hline\text { Sales revenue } & \\ \hline &0\quad\quad\quad\quad \\\hline\end{array}$

Following additional details are provided for the year:
$$\begin{array} { | l | l | } \hline \text { Direct materials placed in production } & \$ 81,000 \\\hline \text { Direct labour incurred } & 199,000 \\\hline \text { Manufacturing overhead incurred } & 306,000 \\\hline \text { Manufacturing overhead allocated to } & \\\text { production } & 287,000 \\\hline \text { Cost of jobs completed and transferred } & 508,000 \\\hline\end{array}$$
The ending balance in the Finished goods inventory account is a:

A) debit of $575,600.
B) debit of $508,000.
C) debit of $59,000.
D) debit of $516,600.

Question 51

At the end of the year,Deltona Company has a preliminary debit balance in the Manufacturing overhead account of $3 950.Which of the following is the year-end adjusting entry needed to clear the balance to zero?

A) Debit Work in process $3 950, credit Manufacturing overhead $3 950
B) Debit Gross profit $3 950, credit Cost of sales $3 950
C) Debit Manufacturing overhead $3 950, credit Cost of sales
D) Debit Cost of sales $3 950, credit Manufacturing overhead $3 950

Question 52

At the end of the year,Martin Company has a preliminary credit balance in the Manufacturing overhead account of $95.Which of the following is the year-end adjusting entry needed to clear the balance to zero?

A) Debit Cost of sales $95, credit Finished goods inventory $95
B) Debit Cost of sales $95, credit Manufacturing overhead $95
C) Debit Manufacturing overhead $95, credit Finished goods inventory $95
D) Debit Manufacturing overhead $95, credit Cost of sales $95

Question 53

The cost of goods manufactured is recorded as a debit to the Finished goods account.

Question 54

At the beginning of 2017,Conway Manufacturing had the following account balances:
$$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Work in } \\\text { process } \\\text { inventory }\end{array} & \quad \quad \quad\\\hline 2700 & \\\hline\end{array}$$
$$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Finished } \\\text { goods }\end{array} & \\\text { inventory } & \quad \quad \quad \\\hline 8800 & \\\hline\end{array}$$
$\begin{array}{|l|l|}\hline\begin{array}{l}\text { Manufacturin }&\quad \\\text { g overhead }&\end{array} \\\hline 0&\quad\quad\quad\quad\\\hline\end{array}$

$\begin{array}{|r|r|}\hline\text { Cost of sales } & \\\hline 0 &\quad\quad\quad\quad \\\hline\end{array}$
$\begin{array}{|r|r|}\hline\text { Sales revenue } & \\ \hline &0\quad\quad\quad\quad \\\hline\end{array}$
Following additional details are provided for the year:
$$\begin{array} { | l | l | } \hline \text { Direct materials placed in production } & \$ 84,000 \\\hline \text { Direct labour incurred } & 195,000 \\\hline \text { Manufacturing overhead incurred } & 306,000 \\\hline \text { Manufacturing overhead allocated to } & \\\text { production } & 288,000 \\\hline \text { Cost of jobs completed and transferred } & 508,000 \\\hline\end{array}$$
The unadjusted balance in the Manufacturing overhead account is a:

A) credit of $18,000.
B) debit of $26,800.
C) credit of $288,000.
D) debit of $18,000.

Question 55

On 30 June,Coraline Company finished job number 750,with total job costs of $4 600,and transferred the costs to Finished goods.On 6 July,they completed the sale of the goods to a customer for $5 100 cash.In order to record the sale,two entries are necessary,one to record revenue,and one to record cost of sales.Which of the following is the correct entry needed to record the revenues?

A) Debit Sales revenue $5 100, credit Cash $5 100
B) Debit cash $5 100, credit Sales revenue $5 100
C) Debit Cost of sales $4 600, credit Sales revenue $4 600
D) Debit Finished goods inventory $4 600, credit Sales revenue $4 600

Question 56

At the beginning of 2017,Conway Manufacturing had the following account balances:
$$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Work in } \\\text { process } \\\text { inventory }\end{array} & \quad \quad \quad \quad\\\hline 2700 & \\\hline\end{array}$$
$$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Finished } \\\text { goods }\end{array} & \quad \quad \quad \quad\\\text { inventory } & \\\hline 8700 & \\\hline\end{array}$$
$\begin{array}{|l|l|}\hline\begin{array}{l}\text { Manufacturin }&\quad \\\text { g overhead }&\end{array} \\\hline 0&\quad\quad\quad\quad\\\hline\end{array}$

$\begin{array}{|r|r|}\hline\text { Cost of sales } & \\\hline 0 &\quad\quad\quad\quad \\\hline\end{array}$
$\begin{array}{|r|r|}\hline\text { Sales revenue } & \\ \hline &0\quad\quad\quad\quad \\\hline\end{array}$
Following additional details are provided for the year:
$$\begin{array} { | l | l | } \hline \text { Direct materials placed in production } & \$ 89,000 \\\hline \text { Direct labour incurred } & 190,000 \\\hline \text { Manufacturing overhead incurred } & 301,000 \\\hline \text { Manufacturing overhead allocated to } & \\\text { production } & 305,000 \\\hline \text { Cost of jobs completed transferred } & 500,000 \\\hline\end{array}$$
The ending balance in the Work in process inventory account is a:

A) credit of $86,700.
B) debit of $84,000.
C) debit of $86,700.
D) credit of $84,000.

Question 57

When jobs are completed,the total cost of the job is recorded as a debit to Finished goods and a credit to Work in process.

Question 58

At 1 January 2017,Feldstein Manufacturing had a beginning balance in Work in process inventory of $90,000 and a beginning balance in Finished goods inventory of $25,000.During the year,Feldstein incurred manufacturing costs of $375,000.
During the year,the following transactions occurred:
Job A-12 was completed for a total cost of $140,000 and was sold for $145,000
Job A-13 was completed for a total cost of $235,000 and was sold for $245,000
Job A-15 was completed for a total cost $62,000 but was not sold as of year-end
At the end of the year,what was the balance in Finished goods inventory?

A) $37,000 credit balance
B) $62,000 debit balance
C) $31,000 debit balance
D) $87,000 debit balance

Question 59

Overallocated manufacturing overhead occurs when the manufacturing overhead allocated to Work in process inventory is less than the amount actually incurred.

Question 60

On 1 January 1,2017,Matthew Company's Work in process inventory account had a balance of $30,000.During 2017,$58,500 of direct materials was placed into production.Manufacturing wages incurred amounted to $85,000,of which $66,000 were for direct labour.Manufacturing overhead is allocated on the basis of 122% of direct labour cost.Actual manufacturing overhead was $90,200.Jobs costing $228,400 were completed during 2017.What is the 31 December 2017 balance of Work in process inventory?

A) $5200
B) $18,700
C) $37,700
D) $6620

Question 61

In the service industry,the use of job order costing is made much more effective if a company uses automated time records.

Question 62

With increased competition,managers need more accurate estimates of product costs to set prices and to identify the most profitable products.

Question 63

Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances.Fogelin has 6 public relations specialists,plus an office staff.At the beginning of 2017,Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $686,800 and a total of 7600 billable hours for the year.All remaining office and administrative costs were estimated at $456,000.The allocation base for office and administrative costs is billable hours.
In June,Fogelin signed a contract for a Russian ballet performance.It estimated it would require 40 hours of specialist time.What is the total cost estimate for this contract?

A) $2400
B) $6015
C) $5775
D) $3615

Question 64

What is the last step in developing an activity-based costing system?

A) Identify the activities.
B) Estimate the total indirect costs of each activity.
C) Allocate costs to the cost object.
D) Estimate the total quantity of the cost driver.

Question 65

Aminta Accounting expects its accountants to work a total of 42,000 direct labour hours per year.Aminta's estimated total indirect costs are $336,000.The direct labour rate is $110 per hour.Direct labour hours is the allocation base for indirect costs.If Aminta does a job requiring 60 hours of direct labour and bills the client using a standard markup of 40%,calculate the amount of the client's bill.

A) $9912
B) $6490
C) $5250
D) $134,400

Question 66

Darrius Travel Services provided the following information:
Cost allocation rate for direct labour: $40 per hour
Cost allocation rate for indirect costs: $22 per hour
If Darrius receives $700 for a job requiring 12 hours of direct labour,it will make a profit of $44.

Question 67

Which of the following statements is CORRECT regarding activity-based costing systems?

A) They are less complex and, therefore, less costly than traditional systems.
B) They accumulate overhead costs by processing departments.
C) They are not as accurate or precise as traditional costing systems.
D) They have separate indirect cost allocation rates for each activity.

Question 68

Job order costing is used primarily in the manufacturing and industrial sectors but is not well suited for the service industry.

Question 69

An activity-based costing system improves the allocation of which of the following manufacturing costs?

A) Sales commissions
B) Indirect manufacturing costs
C) Direct materials
D) Direct labour

Question 70

Which of the following would most likely be treated as an activity in an activity-based costing system?

A) Direct materials cost
B) Direct labour cost
C) Sales revenues
D) Machine processing

Question 71

Activity-based costing systems and traditional costing systems will produce the same results for product cost and profitability,although they use different methods of calculation.

Question 72

Bilkins Financial Advisors provides accounting and finance assistance to customers in the retail business.Bilkins has 6 professionals on staff,plus an office with 8 clerical staff.Total compensation,including benefits,for the professional staff runs about $911,250 per year and they normally have about 9000 billable hours per year.Professional staff keep detailed time sheets organised by the client number.Office and administrative costs total $684,000 a year.
Bilkins allocates professional time and office and administrative costs to clients monthly,using allocation rates based on billable hours.During July,Bilkins's professionals spent 38 hours on their client,Soupy Sales.What is the total amount of cost that Bilkins will record for the client for the month? (Round your intermediate calculations to two decimal places)

A) $2888
B) $5624
C) $6736
D) $3848

Question 73

Which of the following statements is FALSE?

A) Activity-based costing systems tend to be more costly than traditional costing systems.
B) Activity-based costing systems tend to use fewer cost pools than a traditional costing system.
C) Many traditional costing systems can distort product costs and profitability.
D) Many traditional costing systems tend to combine various costs into a single cost pool.

Question 74

Which of the following is MOST likely to be the cost driver for the packaging and shipping activity?

A) Number of components
B) Number of setups
C) Number of orders
D) Hours of testing

Question 75

In a service business that uses a job order costing system,the professional staff would normally keep precise records of time spent on each client.It is equally important that the clerical staff and other indirect labour personnel keep similar records of time spent on each client.

Question 76

JC Manufacturing produces products that use a variety of components.Which of the following cost drivers would be the MOST applicable for assigning material handling costs to the finished products?

A) Number of components used
B) Direct labour cost
C) Direct labour hours
D) Number of units produced

Question 77

Which of the following would NOT be considered an activity for the purposes of an activity-based costing system?

A) Machine processing
B) Direct materials cost
C) Packaging
D) Materials handling

Question 78

When job order costing is used in the service industry,the allocation of indirect costs is normally based on direct labour hours.

Question 79

Traditional costing systems can distort unit manufacturing costs and product profitability when many products are produced and the various products have significantly different production processes.

Question 80

The following four steps are necessary in order to use an activity-based costing system:
1)Calculate the allocation rate for each activity.
2)Identify activities and estimate their total costs.
3)Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base.
4)Allocate the indirect costs to the cost object.
In what order are these steps performed?

A) 3,1,2,4
B) 2,1,3 4
C) 2,3,1,4
D) 1,2,3,4