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CHAPTER 4—Job Order Costing
LEARNING OBJECTIVES
LO 1
How do job order and process costing systems as well as their related valuation
methods differ?
LO 2
What constitutes a “job” from an accounting standpoint?
LO 3
What purposes are served by the primary documents used in a job order costing
system?
LO 4
What journal entries are used to accumulate costs in a job order costing system?
LO 5
How do technological changes impact the gathering and use of information in job
Order costing systems?
LO 6
How are standard costs used in a job order costing system?
LO 7
How does information from a job order costing system support management decision
making?
LO 8
How is spoilage treated in a job-order costing system?
QUESTION GRID
True/False
Difficulty Level
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Difficult
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Completion
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Multiple
Choice
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Short-Answer
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Problem
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TRUE/FALSE
1. A company that produces sugar will use a job order costing system to track production costs.
ANS: F DIF: Easy OBJ: 4-1
2. A company that produces sugar will use a process costing system to track production costs.
ANS: T DIF: Easy OBJ: 4-1
3. A company that manufactures custom bridal gowns will use a job order costing system to track
production costs
ANS: T DIF: Easy OBJ: 4-1
4. A company that manufactures custom bridal gowns will use a process costing system to track costs.
ANS: F DIF: Easy OBJ: 4-1
5. A company that manufactures small quantities of identifiable products will use a job order costing
system
ANS: T DIF: Easy OBJ: 4-1
6. A company that manufactures small quantities of identifiable products will use a process costing
system
ANS: F DIF: Easy OBJ: 4-1
7. A company that manufactures large quantities of homogenous goods will use a process costing system.
ANS: T DIF: Easy OBJ: 4-1
8. In an actual job order costing system, factory overhead is assigned to a job on a periodic basis.
ANS: T DIF: Easy OBJ: 4-1
9. A company that manufactures large quantities of homogenous goods will use a job order costing
system.
ANS: F DIF: Easy OBJ: 4-1
10. Cost flows and physical flows of units are identical.
ANS: F DIF: Easy OBJ: 4-1
11. In an actual job-order costing system, factory overhead is assigned to a job continuously during the
production process.
ANS: F DIF: Easy OBJ: 4-1
12. In a normal job order costing system, actual factory overhead is applied at the end of the period
ANS: F DIF: Easy OBJ: 4-1
13. In a normal job order costing system, factory overhead is applied using actual rates times actual input
ANS: F DIF: Moderate OBJ: 4-1
14. In a normal job order costing system, factory overhead is applied using predetermined rates times
actual input.
ANS: T DIF: Easy OBJ: 4-1
15. In a normal job order costing system, factory overhead is applied using predetermined rates times
standard input
ANS: F DIF: Moderate OBJ: 4-1
16. In a standard job order costing system, factory overhead is applied using predetermined rates times
standard input.
ANS: T DIF: Moderate OBJ: 4-1
17. In a standard job order costing system, factory overhead is applied using actual rates times standard
input.
