Deck 18: Costing Systems: Job Order Costing

Question 1

An advertising company would probably use a process costing system.

Answer 1

False

Question 2

Companies that produce custom-made products usually use a process costing system.

Answer 2

False

Question 3

Like a job order costing system,a process costing system is restricted to one Work in Process Inventory account.

Answer 3

False

Question 4

Job order cost cards for incomplete jobs make up the ending balance of the Finished Goods Inventory account.

Question 5

When a job has been completed,all of the costs assigned to that job are moved to the Cost of Goods Sold account.

Question 6

In a job order costing system,when overhead costs are applied,they decrease the Work in Process Inventory account.

Question 7

The purchasing process begins with a request for indirect materials,whereas the manufacturing process begins with a request for direct materials.

Question 8

A process costing system first assigns the costs to the products manufactured by the departments,and then traces the costs of direct materials,direct labor,and overhead to departments.

Question 9

The production process determines the product costing system needed.

Question 10

In a job order costing system,costs are traced to a specific job order.

Question 11

A job order costing system measures costs of each processes using an inventory account for each.

Question 12

Costs for individual jobs are maintained on material cost cards when job order costing is in use.

Question 13

In a process costing system,product costs are traced to work cells.

Question 14

The computations for costs to be transferred out of Work in Process Inventory differ if the production process involves multiple departments rather than a single department.

Question 15

A company using the periodic inventory system records cost of goods sold when products are sold.

Question 16

Job order costing is used by companies that make unique or special-order products.

Question 17

In a job order costing system,indirect labor costs incurred are debited to the Overhead account.

Question 18

Identical products are produced in a continuous flow production process.

Question 19

A job order costing system is used by companies that manufacture large amounts of similar products.

Question 20

A typical operations costing system for a manufacturer incorporates parts of both job order costing and process costing.

Question 21

A zero balance in Work in Process Inventory at the start of the period means all previously completed products have been shipped.

Question 22

In cost-plus contracts,a predetermined amount of profit is added to the cost of the contract.

Question 23

Predetermined overhead rate is calculated by dividing actual overhead costs by actual cost driver activity.

Question 24

The process of assigning a collection of indirect costs is termed as cost pooling.

Question 25

If the actual overhead costs are more than applied overhead costs,the difference represents overapplied overhead costs.

Question 26

The ending balance in the Work in Process Inventory account equals the ending Overhead balance.

Question 27

Job order cost cards and cost flows through the inventory accounts form the core of a job order costing system.

Question 28

In a service organization using a job order costing system,actual overhead will be the same as applied overhead.

Question 29

In a job order costing system,when the goods are sold,the Cost of Goods Sold account is increased,and the Finished Goods Inventory account is decreased for the selling price of the goods sold.

Question 30

Job costs in a service organization end up in the Finished Goods Inventory account when a job is completed.

Question 31

In a job order costing system,when indirect materials are used,the Overhead account is increased.

Question 32

To prepare financial statements at the end of the accounting period,the actual overhead cost for the period and the estimated overhead that was applied during the period must be reconciled in a job order costing system.

Question 33

After a job is completed,the product's unit cost can be determined from the job order cost card.

Question 34

In a job order costing system,the transfer of overhead costs to the Work in Process Inventory account must take place before product unit costs can be computed.

Question 35

In a job order costing system,a separate job order cost card is used for each individual job.

Question 36

Overhead applied is calculated by multiplying predetermined activity rate and actual cost driver activity.

Question 37

The ending balance of Work in Process account is compared with the total costs shown on the job order cost cards to ensure correctness.

Question 38

Regardless of the cost accounting system used,when the products are completed,they are transferred from work in process inventory to finished goods inventory.

Question 39

If applied overhead exceeds actual overhead,cost of goods sold must be increased by the amount of the overapplied overhead in a job order costing system.

Question 40

In a job order costing system,indirect labor costs are recorded by increasing the Payroll Payable account and increasing the Overhead account.

Question 41

When planning,managers allocate overhead costs using either the traditional or ABC approach.

Question 42

Managers prepare financial statements to communicate the company's performance to its external users.

Question 43

Which of the following products would probably be produced by a company using a process costing system?

A)House
B)Wedding gowns
C)Bags
D)Movie

Question 44

Which of the following is a document prepared every period for each process?

A)Process cost card
B)Process cost report
C)Process cost control sheet
D)Process cost recognition card

Question 45

Service organizations use unit costs of services to determine inventory balances.

Question 46

Process costing is applicable to production operations that

A)utilize several processes,departments,or work cells in a series.
B)do not assign overhead costs to operations.
C)produce products that are made to order.
D)produce unique products.

Question 47

In which of the following situations should a company use process costing rather than job order costing?

A)If the product cost is accumulated in a single Work in Process Inventory account
B)If the product is produced based on individual customer specifications
C)If the product is composed of mass-produced homogeneous units
D)If the product goes through a single stage of production

Question 48

Job estimates must be compared with actuals for evaluating performance.

Question 49

Which of the following is a characteristic of a job order costing system?

A)Uses several Work in Process Inventory accounts
B)Uses job cost cards to keep track of each job in process
C)Assigns costs to specific processes
D)Recognizes cost of materials when products are sold

Question 50

Which of the following is not a characteristic of a process costing system?

A)A specific time period is used
B)Several Work in Process Inventory accounts are used
C)Product costs are grouped by processes,departments,or work cells
D)Customized products are manufactured

Question 51

Managers' knowledge on unit cost helps in setting reasonable selling prices for products.

Question 52

Which of the following firms would most likely use a process costing system?

A)Firm providing legal services
B)Firm manufacturing papers
C)Firm providing advertising services
D)Firm printing wedding invitations

Question 53

The type of product costing system used by a company is dictated by the

A)cost flow assumptions made by the company.
B)production process of the product.
C)inventory system used by the company.
D)selling price of the product.

Question 54

A job order costing system measures product costs

A)using process cost reports.
B)in several Work in Process Inventory account.
C)with regard to the process that created the cost.
D)for each completed unit.

Question 55

Financial statements referred by external stakeholders compare actual unit costs with targeted unit costs.

Question 56

Which of the following is not an objective of product costing systems?

A)To provide information for cost planning
B)To assist in the preparation of the income statement
C)To determine the taxable profits
D)To provide information for product pricing

Question 57

Which of the following characteristics applies to process costing,but does not apply to job order costing?

A)The use of single Work in Process accounts
B)The use of equivalent units
C)Separate,identifiable jobs
D)The use of predetermined overhead rates

Question 58

Which of the following represents the product costs on the income statement?

A)Cost of goods sold
B)Sales revenue
C)Sales commissions
D)None of these

Question 59

Which of the following products would probably use a job order costing system?

A)Pens
B)Instant coffee
C)Computer monitors
D)Advertisements

Question 60

Which of the following accurately describes a difference between job order and process costing systems?

A)In job order costing systems,overhead costs are treated as product costs,whereas in process costing systems,overhead costs are treated as period costs.
B)Job order costing systems do not assign costs to production,whereas process costing systems do.
C)In job order costing systems,costs are traced to a specific job order,whereas in process costing systems,costs are traced to work cells and then assigned to products manufactured.
D)In a job order costing system,selling costs are treated as period costs,whereas they are treated as product costs in a process costing system.

Question 61

The basic document for keeping track of all costs in a job order costing system is a

A)job order cost card.
B)labor time card.
C)process cost report.
D)materials requisition form.

Question 62

If there is a credit balance in the Payroll Payable at the end of the accounting period,it represents

A)the amount by which applied payroll was greater than actual payroll.
B)the amount by which actual payroll was greater than applied payroll.
C)labor costs which have not been paid.
D)an amount that should be charged to Cost of Goods Sold.

Question 63

The following information is available at the end of the period for the completed Job 73: What is the unit cost for Job 73?

A)$2.55
B)$3.19
C)$1.50
D)$3.92

Question 64

Which of the following entities would probably use a process costing system?

A)An oil refinery
B)A yacht builder
C)A custom furniture company
D)A custom jewelry manufacturer

Question 65

The _________ provides the most direct means of calculating unit costs for a job.

A)job order cost card
B)Finished Goods Inventory account
C)general ledger
D)Materials Inventory account

Question 66

When Smith Builder's Designer House #201 is completed,Smith's

A)Work in Process Inventory is increased.
B)total assets are increased.
C)Work in Process Inventory is decreased.
D)total assets are decreased.

Question 67

The balance in the Work in Process Inventory account on October 1 was $14,000,and the balance on October 31 was $85,400.Costs incurred during the month were as follows: direct materials,$55,820;direct labor,$58,420;and overhead,$40,000.What amount was transferred to the Finished Goods Inventory account during October?

A)$82,840
B)$154,240
C)$239,640
D)$140,240

Question 68

If the difference between overhead applied and actual overhead is insignificant,it is usually written off to

A)Cost of Goods Sold.
B)Work in Process Inventory.
C)Finished Goods Inventory.
D)Materials Inventory.

Question 69

Costs assigned to the building of a ship should appear on the income statement when

A)the ship is completed.
B)the ship is sold.
C)the purchase order to manufacture the ship is received.
D)cash is collected for the sale of the ship.

Question 70

When direct materials are issued from inventory to production under a job order costing system,an increase is recorded in the

A)Overhead account.
B)Work in Process Inventory account.
C)Materials Inventory account.
D)Finished Goods Inventory account.

Question 71

Under a job order costing system,the dollar amount of the entry to record the transfer of goods from Work in Process Inventory to Finished Goods Inventory is the total of the costs charged to all jobs

A)started during the period.
B)completed and sold during the period.
C)completed during the period.
D)started and completed during the period.

Question 72

Applied overhead of a company exceeds actual overhead when the

A)Overhead account has a credit balance.
B)journal entry to account for the difference involves a debit to Cost of Goods Sold.
C)Overhead account has a debit balance.
D)company has overspent in the overhead cost area.

Question 73

Unit costs for each job are computed by dividing

A)estimated total costs by planned units to be produced.
B)actual costs by actual units sold.
C)cost of direct materials,direct labor,and overhead by number of units produced.
D)estimated total costs by actual units sold.

Question 74

The balances on the job cost sheets of uncompleted jobs will be equal to the balance in the

A)Finished Goods Inventory account.
B)Cost of Goods Sold account.
C)Work in Process Inventory account.
D)Overhead account.

Question 75

The Work in Process Inventory account in a job order costing system consists of

A)time conversion cards.
B)job conversion cards.
C)job order cost cards.
D)product cost cards.

Question 76

The applied overhead of a job is more than the actual overhead and it is considered immaterial by the company.An entry to record this would involve a

A)debit to the Materials Inventory account.
B)credit to the Overhead account.
C)credit to the Cost of Goods Sold account.
D)debit to the Work in Process Inventory account.

Question 77

The total of the dollar amounts on the job order cost cards that have not been completed would be equal to the

A)cost of goods completed.
B)balance in the Finished Goods Inventory account.
C)cost of goods sold.
D)balance in the Work in Process Inventory account.

Question 78

The following information is available at the end of May: If $72,400 of materials were charged to Job 88's job cost card,how much overhead was applied to Job 88?

A)$35,100
B)$70,000
C)$72,400
D)$120,000

Question 79

Applied overhead is less than actual overhead incurred during the year.Which of the following journal entries is made to close the Overhead account if this difference is immaterial?

A)Overhead Work in Process
B)Cost of Goods Sold Overhead
C)Overhead Finished Goods Inventory
D)Cost of Goods Sold Finished Goods Inventory

Question 80

Which of the following is the entry to record indirect labor costs incurred?

A)Work in Process Inventory Overhead
B)Overhead Work in Process Inventory
C)Overhead Payroll Payable
D)Payroll Payable Overhead