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

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

Manufacturing firms produce intangible products that cannot be inventoried.

Question 7

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

Question 8

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

Question 9

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 10

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

Question 11

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

Question 12

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

Question 13

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

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

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 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

Inseparability means that production and consumption are inseparable for services.

Question 21

Abnormal spoilage is charged to the job that caused it.

Question 22

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

Question 23

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

Question 24

In __________ a single product is produced on a continuous basis.

Question 25

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

Question 26

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

Question 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

__________ is the recognition and recording of costs.

Question 32

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

Question 33

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

Question 34

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

Question 35

The __________ costing system assigns costs by the job.
or

Question 36

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

Question 37

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

Question 38

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

Question 39

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

Question 40

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

Question 41

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 42

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

Question 43

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 44

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 45

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

Question 46

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

Question 47

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

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

Question 48

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 49

Which of the following is a pure service?

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

Question 50

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 51

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 52

Which of the following is a manufactured product?

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

Question 53

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 54

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 55

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

Question 56

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 57

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 58

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

Question 59

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

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

Question 60

Process costing would be most applicable for

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

Question 61

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 62

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 63

Disadvantages of actual costing include

A) actual cost systems cannot provide accurate unit cost information on a timely basis.
B) actual cost systems produce unit costs that fluctuate from period to period.
C) estimates must be used when calculating the actual overhead rate.
D) both a and b.

Question 64

Normal costing uses which cost in work in process?

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

Question 65

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 66

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 67

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 68

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 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

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 71

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 72

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 73

Unit cost information is needed for

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

Question 74

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 75

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 76

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

Question 77

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 78

The recognition and recording of costs is called:

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

Question 79

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 80

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