Deck 5: Product and Service Costing: Job-Order System

Question 1

Manufacturing firms produce intangible products that cannot be inventoried.

Answer 1

False

Question 2

Heterogeneity means that services cannot be inventoried and must be consumed when performed.

Answer 2

False

Question 3

The collection of all job-order cost sheets defines a work-in-process inventory file.

Answer 3

True

Question 4

A production process may yield a tangible product or a service and their unique characteristics determine the best approach for developing a cost management system.

Question 5

In a job-order costing system, actual overhead costs never enter the work-in-process inventory accounts

Question 6

Companies operating in job-order industries produce a wide variety of products or jobs that are quite different from each other.

Question 7

In a job-order costing system, direct labor costs assigned to a job are different than the costs assigned to work-in- process inventory.

Question 8

Cost assignment is the assignment of costs to products or services once the costs have been accumulated and measured.

Question 9

Cost flow follows costs from the point they are incurred to the point they are recognized as an expense on the income statement.

Question 10

The uniqueness of the products or units for cost accounting purposes relates to their common costs.

Question 11

Inseparability means that production and consumption are inseparable for services.

Question 12

Activity level is the average activity usage over the long term and normal activity level is the production level for one year.

Question 13

A job-order costing process would be applicable for an airplane manufacturer.

Question 14

Cost accumulation is the determination of the dollar amounts of direct materials, direct labor and overhead costs, and cost measurement is the recognition and recording of costs.

Question 15

Unit cost is a critical piece of information for a manufacturing business as well as a service company.

Question 16

The job-order cost sheet accumulates the cost of all the jobs produced.

Question 17

When materials are purchased, the costs of the materials "flows" into the materials inventory account.

Question 18

The source document known as a time ticket assigns the direct overhead to each particular job.

Question 19

The costs of a completed job are transferred from the work-in-process inventory account to the finished goods inventory account.

Question 20

Service firms produce intangible products that are not separable from the customer.

Question 21

Purchases of direct materials are recorded as a debit to the __________ account.

Question 22

In an activity­based costing system activity cost is applied to each job by multiplying productivity rate by the job's use of the associated driver.

Question 23

Costs of normal spoilage are included in overhead and applied to all good units produced.

Question 24

The total applied overhead at a given point in time is given by the credit balance in the control account.

Question 25

The actual costs are not included on a job-order sheet.

Question 26

A inventory file is a file of job-order cost sheets.

Question 27

A service organization does not use raw material or tangible items for the customer.

Question 28

Abnormal spoilage is charged to the job that caused it.

Question 29

are the source of information for posting the labor cost flows.

Question 30

Determining the dollar amounts of direct materials, direct labor, and overhead used in production involves
__________ .

Question 31

The costing system assigns costs by the job.

Question 32

The activity level is the production level a firm expects to attain for the coming year.

Question 33

The form indicates the type and quantity of each material issued to the factory.

Question 34

In a single product is produced on a continuous basis.

Question 35

The association of production costs with the units produced is called .

Question 36

The entry that captures the flow of material from the storeroom to work-in-process is called the inventory account.

Question 37

A debit balance in overhead control implies that actual overhead costs exceed overhead applied.

Question 38

means that services cannot be inventoried but must be consumed when performed.

Question 39

In job-order costing, departmental overhead rates and activity-based costing affect only the application of overhead.

Question 40

is the recognition and recording of costs.

Question 41

Homogeneous products refer to

A) products similar in nature.
B) the nonphysical nature of services and opposed to products.
C) great variation in the nature products.
D) products that can be inventoried.

Question 42

A pure service organization has

A) no raw materials, no inventories, and a definite separation between the plant and the customer.
B) raw materials, tangible items, and no separation between the plant and the customer.
C) no raw materials, no tangible items, and no separation between the plant and the customer.
D) none of these.

Question 43

Which of the following products would NOT use job-order costing?

A) houses
B) chemicals
C) ships
D) custom-built furniture

Question 44

Which cost accounting process would be most appropriate for accumulating costs of identical, standardized units?

A) job-order costing
B) process costing
C) normal costing
D) standard costing

Question 45

Which of the following would NOT use a process costing system?

A) electrical wire
B) cotton yarn
C) newsprint
D) satellites

Question 46

Which of the following is a pure service?

A) bungee jumping
B) beauty salon
C) restaurant
D) software

Question 47

When a job is shipped to a customer, the finished job cost becomes the cost of the sold.

Question 48

Heterogeneity refers to the

A) nonphysical nature of services as opposed to products.
B) fact that production and consumption are inseparable for services.
C) greater chances for variation in the performance of services than in the production of products.
D) fact that services cannot be inventoried but must be consumed when performed.

Question 49

Which of the following firms would make extensive use of a job-order costing?

A) dental and medical services
B) canned foods
C) discount brokers
D) petroleum

Question 50

When a job is completed the total costs are transferred to a inventory file.

Question 51

The defective units expected due to the nature of the typical production process are called __________ .

Question 52

Manufacturers producing unique or customized products would employ a(n)

A) process costing system.
B) job-costing system.
C) homogeneous costing system.
D) all of the above.

Question 53

Perishability refers to the

A) nonphysical nature of services as opposed to products.
B) fact that production and consumption are inseparable for services.
C) greater chances for variation in the performance of services than in the production of products.
D) fact that services cannot be inventoried but must be consumed when performed.

Question 54

Intangibility refers to the

A) nonphysical nature of services as opposed to products.
B) fact that production and consumption are inseparable for services.
C) greater chances for variation in the performance of services than in the production of products.
D) fact that services cannot be inventoried but must be consumed when performed.

Question 55

Process costing would be most applicable for

A) custom machining.
B) an electronics producer.
C) high rise building construction.
D) CPA audits.

Question 56

Which of the following firms would make extensive use of service costing?

A) Law firm
B) furniture manufacturer
C) auto dealer
D) auto manufacturer

Question 57

Inseparability refers to the

A) nonphysical nature of services as opposed to products.
B) fact that production and consumption are inseparable for services.
C) greater chances for variation in the performance of services than in the production of products.
D) fact that services cannot be inventoried but must be consumed when performed.

Question 58

In job-order costing, departmental overhead rates and activity-based costing affect only the application of
__________ .

Question 59

The defective units due to the exacting nature of a particular job is called .

Question 60

Which of the following is a manufactured product?

A) bungee jumping
B) beauty salon
C) automobile
D) restaurant

Question 61

Unit cost is important information for which of the following?

A) valuing inventory
B) determining income
C) decision making
D) all of the above

Question 62

The process where a single product is produced on a continuous basis is called:

A) process production
B) job-order production
C) job production
D) both a and c

Question 63

A normal costing system records which costs in work in process?

A) actual direct materials, actual direct labor, actual manufacturing overhead
B) applied direct materials, applied direct labor, applied manufacturing overhead
C) applied materials and labor and actual manufacturing overhead
D) actual materials and labor and applied manufacturing overhead

Question 64

An actual overhead rate can be calculated

A) at the beginning of the year.
B) at the end of each month.
C) at the beginning of each month.
D) either at the beginning of the year or at the beginning of the month.

Question 65

The production level the firm expects to attain for the coming year is called:

A) Practical activity level
B) Normal activity level
C) Theoretical activity level
D) Expected activity level

Question 66

In developing unit costs, overhead costs should be assigned using activity drivers. Which would be the likely activity driver for a production process using a lathe?

A) units produced
B) direct labor hours
C) machine hours
D) direct materials cost

Question 67

The principal difficulty with normal costing is that

A) the unit cost information is not received on a timely basis.
B) it can result in fluctuating per-unit overhead costs.
C) estimated overhead and estimated activity are likely to differ from actual overhead and actual costs, resulting in underapplied or overapplied overhead.
D) there is no difficulty associated with using normal costing.

Question 68

The recognition and recording of costs is called:

A) Cost assignment
B) Cost measurement
C) Cost accumulation
D) Job order costing

Question 69

Determining the dollar amounts of direct materials, direct labor, and overhead used in production involves:

A) Job order costing
B) Cost accumulation
C) Cost assignment
D) Cost measurement

Question 70

The predetermined overhead rate is usually calculated at the

A) end of each month.
B) beginning of each month.
C) beginning of the year.
D) end of the year.

Question 71

Unit costs are critical for

A) valuing inventory.
B) determining net income.
C) decisions to enter a new product line.
D) all of the above.

Question 72

The average activity that a firm experiences in the long term (more than one year) is called:

A) Expected activity level
B) Normal activity level
C) Theoretical activity level
D) Practical activity level

Question 73

Manufacturing overhead consists of all

A) costs other than direct materials.
B) manufacturing costs other than direct materials.
C) costs other than direct materials and direct labor.
D) manufacturing costs other than direct materials and direct labor.

Question 74

The association of production costs with the units produced is called:

A) Job-order costing
B) Cost assignment
C) Cost measurement
D) Cost accumulation

Question 75

The effect of uniform production levels on unit production costs can be achieved

A) by using a factory overhead rate based on long-run normal production activity level.
B) by using a factory overhead rate based on selling price.
C) by closing the factory overhead at the end of the accounting period.
D) by using a factory overhead rate based on different production levels for each year.

Question 76

Normal costing uses which cost in work in process?

A) applied direct materials
B) actual overhead
C) applied overhead
D) budgeted overhead

Question 77

Which of the following costs is usually NOT easily traceable to finished units of product?

A) direct labor
B) direct materials
C) manufacturing overhead
D) all of the above

Question 78

A source document

A) is only an external document.
B) provides transaction data that can be recorded in a database.
C) is only used to record a transaction between an organization and an outside vendor.
D) is only an internal document.

Question 79

Unit cost information is needed for

A) costing inventory.
B) financial reporting requirements.
C) decision making.
D) all of the above.

Question 80

Which of the following costing systems assigns actual costs of materials to inventory?

A) actual costing system
B) normal costing system
C) standard costing system
D) both a and b