Question 1

Which one of the following is a major purpose of cost accounting?

Accepted Answer

A) To provide gross profit rates to managers 
B) To allocate overhead costs to jobs 
C) To classify all costs as direct or indirect 
D) To measure, record, and report product costs

Question 2

Why is it necessary to estimate the annual overhead costs and annual operating activity when calculating the predetermined overhead rate?

Accepted Answer

A) Cost benefit analysis indicates that it is too expensive to gather actual costs. 
B) The predetermined overhead rate is only used for internal reporting, and does not need to equal the higher standards required for external reporting. 
C) In order to obtain timely information, companies cannot wait for actual costs to be determined. 
D) All of the above.

Question 3

How is the employee time ticket used?

Accepted Answer

A) It is kept as evidence of payment to employees. 
B) It is used only by the production supervisor to track which employees show up for work. 
C) It is used as a basis for determining the cost of labour to add to jobs. 
D) It is only sent to the accounting department to create pay cheques for employees.

Question 4

Factory labour is accumulated using time clocks and time cards.

Accepted Answer

A) True 
 B)False

Question 5

The perpetual inventory method is used in a cost accounting system.

Accepted Answer

A) True 
 B)False

Question 6

Tra Corporation is analyzing its account balances for 2012.As of the end of 2012, a debit balance of $4,000 remains in the manufacturing overhead account.What impact will this have on the financial statements?

Accepted Answer

A) It will increase assets by $4,000 and have no effect on income. 
B) It will increase income by $4,000. 
C) It will reduce income by $4,000. 
D) It will decrease gross profit but have no effect on income.

Question 7

At the end of the year, Manufacturing Overhead has been over-applied.What occurred to create this situation?

Accepted Answer

A) The company incurred more total job costs than the amount budgeted for the job. 
B) The actual manufacturing overhead costs were less than the manufacturing overhead assigned to jobs. 
C) The company incurred more manufacturing overhead costs than the manufacturing overhead assigned to jobs. 
D) Estimated manufacturing overhead was less than actual manufacturing overhead costs.

Question 8

Which one of the costs below is not considered part of direct labour costs?

Accepted Answer

A) Employer payroll taxes on factory workers 
B) Gross earnings of the general manager of the plant 
C) Gross earnings of factory workers 
D) Fringe benefits

Question 9

As manufacturing overhead is incurred, it is added to the individual job.

Accepted Answer

A) True 
 B)False

Question 10

Sportly, Inc.finished Job B14 during 2012.The job cost sheet listed the following:  How much is the cost of the finished goods on hand from this job?

Accepted Answer

A) $126,000 
B) $75,600 
C) $50,400 
D) $61,200

Question 11

In applying costs using a pre-determined overhead rate, the most common allocation base is generally

Accepted Answer

A) Direct labour hours. 
B) Direct materials used. 
C) Indirect labour hours. 
D) Indirect materials used.

Question 12

Which of the following represents the two basic types of cost accounting systems?

Accepted Answer

A) Job order and process cost systems 
B) Job order and job accumulation systems 
C) Job order and batch systems 
D) Process cost and batch systems

Question 13

What is unique about the flow of costs in a job order cost system?

Accepted Answer

A) Each job is costed separately in a Work in Process subsidiary ledger. 
B) It involves accumulating material, labour, and manufacturing overhead costs as they are incurred in order to determine the job cost. 
C) Job costs cannot be measured until all overhead costs are determined. 
D) There are no costs remaining in Work in Process at year end.

Question 14

How does a company eliminate any immaterial balance in the Manufacturing Overhead account at the end of the year?

Accepted Answer

A) The amount is moved to Cost of Goods Sold. 
B) The amount remains in the Manufacturing Overhead Expense account and appears on the income statement. 
C) The amount is closed to Retained Earnings. 
D) The amount is moved to Finished Goods Inventory.

Question 15

If over-applied overhead is considered material, it is subtracted from Work in Process upon disposal.

Accepted Answer

A) True 
 B)False

Question 16

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 17

When a job is completed, its cost is removed from the Work in Process Inventory account and added to Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 18

For which of the following products would a job-order costing system be appropriate?

Accepted Answer

A) Steel plant which makes one type of steel 
B) Door and window manufacturer making products like individual windows for houses 
C) Cement plant where a single identical type of cement product is manufactured 
D) Soda bottling plant where each type of soda is produced in a separate batch

Question 19

Companies generally use a variation of either a job order cost system or a process cost system.

Accepted Answer

A) True 
 B)False

Question 20

A job order cost system and a process cost system are two alternative cost accounting systems.

Accepted Answer

A) True 
 B)False

Exam 3: Job Order Costing

Which one of the following is a major purpose of cost accounting?

Why is it necessary to estimate the annual overhead costs and annual operating activity when calculating the predetermined overhead rate?

How is the employee time ticket used?

Factory labour is accumulated using time clocks and time cards.

The perpetual inventory method is used in a cost accounting system.

Tra Corporation is analyzing its account balances for 2012.As of the end of 2012, a debit balance of $4,000 remains in the manufacturing overhead account.What impact will this have on the financial statements?

At the end of the year, Manufacturing Overhead has been over-applied.What occurred to create this situation?

Which one of the costs below is not considered part of direct labour costs?

As manufacturing overhead is incurred, it is added to the individual job.

Sportly, Inc.finished Job B14 during 2012.The job cost sheet listed the following: How much is the cost of the finished goods on hand from this job?

In applying costs using a pre-determined overhead rate, the most common allocation base is generally

Which of the following represents the two basic types of cost accounting systems?

What is unique about the flow of costs in a job order cost system?

How does a company eliminate any immaterial balance in the Manufacturing Overhead account at the end of the year?

If over-applied overhead is considered material, it is subtracted from Work in Process upon disposal.

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of manufacturing overhead.

When a job is completed, its cost is removed from the Work in Process Inventory account and added to Cost of Goods Sold.

For which of the following products would a job-order costing system be appropriate?

Companies generally use a variation of either a job order cost system or a process cost system.

A job order cost system and a process cost system are two alternative cost accounting systems.