Name:
Class:
Date:
Indicate whether the statement is true or false.
1. A law firm would use a job order cost system to accumulate all of the costs associated with a particular client
engagement, such as lawyer time, copying charges, filing fees, and overhead.
a.
True
b.
False
2. The current year’s advertising costs are normally considered period costs.
a.
True
b.
False
3. Job order cost systems can be used to compare unit costs of similar jobs to determine if costs are staying within
expected ranges.
a.
True
b.
False
4. The materials requisition serves as the source document for debiting the accounts in the materials ledger.
a.
True
b.
False
5. If factory overhead applied exceeds the actual costs, the factory overhead account will have a credit balance.
a.
True
b.
False
6. The process cost system is appropriate where few products are manufactured and each product is made to customers’
specifications.
a.
True
b.
False
7. In a job order cost accounting system for a service business, materials costs are normally included as part of overhead.
a.
True
b.
False
8. The job order costing system is not used by service organizations.
a.
True
b.
False
9. Activity-based costing is a method of accumulating and allocating costs by department.
a.
True
b.
False
10. Direct labor cost is an example of a period cost.
a.
True
b.
False
11. On the balance sheet for a manufacturing business, the cost of direct materials, direct labor, and factory overhead,
Name:
Class:
Date:
which have entered into the manufacturing process but are associated with products that have not been finished, are
reported as direct materials inventory.
a.
True
b.
False
12. A process cost accounting system provides product costs for each of the departments or processes within the factory.
a.
True
b.
False
13. A receiving report is prepared when purchased materials are first received by the manufacturing department.
a.
True
b.
False
14. Nonmanufacturing costs are generally classified into two categories: selling and administrative.
a.
True
b.
False
15. Using the job order cost system, service organizations are able to bill customers on a weekly or monthly basis, even
when the job has not been completed.
a.
True
b.
False
16. If factory overhead applied exceeds the actual costs, overhead is said to be underapplied.
a.
True
b.
False
17. In the job order costing system, the finished goods account is the controlling account for the factory overhead ledger.
a.
True
b.
False
18. When the goods are sold, their costs are transferred from Work in Process to Finished Goods.
a.
True
b.
False
19. Interim financial statements for a manufacturing business would report overapplied factory overhead as a deferred
item on the balance sheet.
a.
True
b.
False
20. A job order cost system would be appropriate for a crude oil refining business.
a.
True
b.
False
21. The inventory accounts generally maintained by a manufacturing firm are only finished goods and materials.
a.
True
b.
False
Name:
Class:
Date:
b.
False
22. The document that serves as the basis for recording direct labor on a job cost sheet is the time ticket.
a.
True
b.
False
23. A manufacturing business reports just two types of inventory on its balance sheet: work in process inventory and
finished goods inventory.
a.
True
b.
False
24. A process cost accounting system is best used by manufacturers of like units of product that are not distinguishable
from each other during a continuous production process.
a.
True
b.
False
25. As product costs are incurred in the manufacturing process, they are accounted for as assets and reported on the
balance sheet as inventory.
a.
True
b.
False
26. Each account in the work in process subsidiary ledger in a job order costing system is called a job cost sheet.
a.
True
b.
False
27. Factory overhead is applied to production using a predetermined overhead rate.
a.
True
b.
False
28. If the underapplied factory overhead amount is immaterial, it is transferred to Cost of Goods Sold at the end of the
fiscal year.
a.
True
b.
False
29. Job cost sheets can provide information to managers on unit cost trends, the cost impact of continuous improvement in
the manufacturing process, the cost impact of materials changes, and the cost impact of direct materials price or direct
labor rate changes over time.
a.
True
b.
False
30. Depreciation expense on factory equipment is part of factory overhead cost.
a.
True
b.
False
31. A process cost accounting system provides for a separate record of the cost of each particular quantity of product that
passes through the factory.
a.
True
Name:
Class:
Date:
32. Perpetual inventory controlling accounts and subsidiary ledgers are maintained for materials, work in process, and
finished goods in job order costing systems.
a.
True
b.
False
33. Generally accepted accounting principles require companies to use only one factory overhead rate for product costing.
a.
True
b.
False
34. Job order cost accounting systems can be used only for companies that manufacture a product.
a.
True
b.
False
35. Information about costs developed through a job order cost system cannot be used to evaluate an organization’s cost
performance.
a.
True
b.
False
36. Materials are transferred from the storeroom to the factory in response to materials requisitions.
a.
True
b.
False
37. A job order cost accounting system provides for a separate record of the cost of each particular quantity of product
that passes through the factory.
a.
True
b.
False
38. The direct labor and overhead costs of providing services to clients are accumulated in a work in process account.
a.
True
b.
False
39. A service organization will not use the job order costing method because it has no direct materials.
a.
True
b.
False
40. Period costs are costs that are incurred for the production requirements of a certain period.
a.
True
b.
False
41. The debit to Factory Overhead for the cost of indirect materials is obtained from the summary of the materials
requisitions.
a.
True
b.
False
42. Indirect materials are any materials needed to make a product that can be directly traced to the product.
Name:
Class:
Date:
a.
True
b.
False
43. Cost accounting systems measure, record, and report product costs.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
44. Materials purchased on account during the month amounted to $190,000. Materials requisitioned and placed in
production totaled $156,000. The journal entry to record the materials requisitioned by the production department is
a.
Materials 156,000
Work in Process 156,000
b.
Work in Process 190,000
Materials 190,000
c.
Work in Process 156,000
Materials 156,000
d.
Work in Process 156,000
Cash 156,000
45. Journalizing the entry to record a job completed would include a debit to
a.
Factory Overhead
b.
Finished Goods
c.
Work in Process
d.
Cost of Goods Sold
46. At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing
over/underapplied overhead into Cost of Goods Sold would cause net income to
a.
increase by $1,700,000
b.
decrease by $1,700,000
c.
increase by $3,400,000
d.
decrease by $3,400,000
47. Which of the following is a period cost?
a.
depreciation on factory lunchroom furniture
b.
salary of telephone receptionist in the sales office
c.
salary of a security guard for the factory parking lot
d.
computer chips used by a computer manufacturer
48. Costs that are incurred in generating revenues during the period, but are not involved in the manufacturing process are
referred to as
a.
period costs
b.
conversion costs
c.
factory overhead costs
d.
product costs
Name:
Class:
Date:
49. The period costs of a textbook printer would include
a.
wages of a press operator
b.
factory insurance costs
c.
CEO salary expense
d.
paper costs
50. Period costs are
a.
found on the balance sheet
b.
not involved in the production process
c.
classified as direct labor, direct material, or factory overhead
d.
found on the job order cost sheets
51. Period costs are classified as either
a.
selling expenses or production expenses
b.
administrative expense or production expenses
c.
selling expenses or administrative expenses
d.
general expenses or selling expenses
52. Costs that are treated as assets until the product is sold are
a.
product costs
b.
period costs
c.
conversion costs
d.
selling expenses
53. The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished
products shipped to customers had total production costs of $375,000. The journal entry to record the transfer of costs
from work in process to finished goods is
a.
Finished Goods 375,000
Work in Process 375,000
b.
Finished Goods 540,000
Work in Process 540,000
c.
Work in Process 540,000
Finished Goods 540,000
d.
Work in Process 375,000
Finished Goods 375,000
54. Journalizing the entry to record jobs shipped and customers billed would include a debit to
a.
Accounts Payable
b.
Cash
c.
Finished Goods
d.
Cost of Goods Sold
55. In a job order cost accounting system, the journal entry to record the flow of direct labor costs into production consists
of a
a.
debit to Factory Overhead and a credit to Work in Process
Name:
Class:
Date:
b.
debit to Finished Goods and a credit to Wages Payable
c.
debit to Work in Process and a credit to Wages Payable
d.
debit to Factory Overhead and a credit to Wages Payable
56. The source document for the data for debiting Work in Process for direct materials is a
a.
purchase order
b.
purchase requisition
c.
materials requisition
d.
receiving report
57. Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine
hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. The
predetermined overhead rate based on machine hours is
a.
$48 per machine hour
b.
$62 per machine hour
c.
$45 per machine hour
d.
$50 per machine hour
58. Which of the following products would most likely be manufactured using a job order costing system?
a.
cell phone
b.
highlighter pen
c.
graduation invitation
d.
recliner
59. During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders
and $25,000 for general factory use (indirect labor). In addition, factory overhead charged to production was $32,000. The
journal entry to record the direct labor costs is
a.
Work in Process 150,000
Wages Payable 150,000
b.
Work in Process 175,000
Wages Payable 175,000
c.
Wages Payable 175,000
Work in Process 175,000
d.
Wages Payable 150,000
Work in Process 150,000
60. A difference in quantity of materials used on two comparable jobs may be caused by
a.
inadequately trained employees
b.
poor quality materials
c.
incorrect instructions attached to the job
d.
all of these choices
61. Which of the following is a product cost?
a.
salary of a sales manager
b.
advertising for a particular product
Name:
Class:
Date:
c.
drill bits for a drill press used in the plant assembly area
d.
salary of the company receptionist
62. All of the following are true regarding product costs except
a.
product costs are found on the balance sheet until they are sold
b.
product costs consist of direct labor, direct materials, and factory overhead
c.
product costs can be found in three accounts on the balance sheet
d.
product costs include sales and administrative expenses
63. Selected accounts with some amounts omitted are as follows:
Work in Process
Oct. 1
Balance
20,000
Oct. 31
Goods finished
X
31
Direct materials
96,700
31
Direct labor
201,000
31
Factory overhead
X
Finished Goods
Oct. 1
Balance
52,000
31
Goods finished
360,000
If the balance of Work in Process on October 31 is $21,000, what was the amount of factory overhead applied in October?
a.
$63,300
b.
$21,300
c.
$42,300
d.
$11,300
64. The finished goods account is the controlling account for the
a.
cost ledger
b.
materials ledger
c.
work in process ledger
d.
stock ledger
65. A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of the
materials from the controlling account in the general ledger to the controlling accounts for
a.
Work in Process and Cost of Goods Sold
b.
Work in Process and Factory Overhead
c.
Finished Goods and Cost of Goods Sold
d.
Work in Process and Finished Goods
66. Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours. The
machine hours for the month of April for all of the jobs were 4,780. If the actual factory overhead totaled $141,800,
determine the over- or underapplied amount for the month.
a.
$7,575 underapplied
b.
$35,220 underapplied
c.
$7,575 overapplied
Name:
Class:
Date:
d.
$35,220 overapplied
67. Journalizing the entry to record a job completed would include a credit to
a.
Factory Overhead
b.
Finished Goods
c.
Work in Process
d.
Cost of Goods Sold
68. At the end of July, the first month of the current fiscal year, the factory overhead account had a debit balance. Which
of the following describes the nature of this balance and how it would be reported on the interim balance sheet?
a.
overapplied, deferred credit
b.
underapplied, deferred debit
c.
underapplied, deferred credit
d.
overapplied, deferred debit
69. A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it
estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual factory overhead
costs incurred were $377,200, and actual direct labor hours were 36,000. What is the amount of overapplied or
underapplied manufacturing overhead at the end of the year?
a.
$6,000 overapplied
b.
$6,000 underapplied
c.
$54,800 overapplied
d.
$54,800 underapplied
70. Thomlin Company forecasts that total overhead for the current year will be $15,000,000 with 300,000 total machine
hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. If Thomlin
Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year
to date), the overhead is
a.
$1,000,000 overapplied
b.
$1,000,000 underapplied
c.
$500,000 overapplied
d.
$500,000 underapplied
71. Which of the following entries would not be found on the books of a service provider?
a.
a debit to Work in Process and a credit to Materials
b.
a debit to Work in Process and a credit to Wages Payable
c.
a debit to Work in Process and a credit to Overhead
d.
a debit to Cost of Services and a credit to Work in Process
72. A widely used activity base for developing factory overhead rates in highly automated settings is
a.
direct labor hours
b.
direct labor dollars
c.
direct materials
d.
machine hours
Name:
Class:
Date:
73. Which of the following represents the factory overhead applied to a product?
a.
predetermined factory overhead rate times estimated activity base
b.
actual factory overhead rate times estimated activity base
c.
predetermined factory overhead rate times actual activity base
d.
actual factory overhead rate times actual activity base
74. When a job is completed in a service organization, the job costs are transferred to the
a.
work in process account
b.
cost of services account
c.
finished goods account
d.
cost of goods sold account
75. During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders
and $25,000 for general factory use. Factory overhead applied to production was $23,000. The journal entry to record the
factory overhead applied to production is
a.
Work in Process 25,000
Factory Overhead 25,000
b.
Factory Overhead 23,000
Work in Process 23,000
c.
Work in Process 23,000
Factory Overhead 23,000
d.
Factory Overhead 25,000
Accounts Payable 25,000
76. Job order costing and process costing are
a.
pricing systems
b.
cost accounting systems
c.
cost flow systems
d.
inventory tracking systems
77. In a job order cost accounting system, when goods that have been ordered are received, the receiving department
personnel count the goods, inspect the goods, and complete a
a.
purchase order
b.
sales invoice
c.
receiving report
d.
purchase requisition
78. The journal entries to record the cost and sale of a finished good on account are
a.
debit Cost of Goods Sold, credit Finished Goods; debit Accounts Payable, credit Sales
b.
debit Cost of Goods Sold, credit Finished Goods; debit Accounts Receivable, credit Sales
c.
debit Sales Expense, credit Finished Goods; debit Cash, credit Accounts Receivable
d.
debit Work in Process, credit Finished Goods; debit Accounts Receivable, credit Sales
Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the
year. Below is a list of all the jobs for the quarter:
Name:
Class:
Date:
Balance
Job 356
$ 450
Job 357
1,235
Job 358
378
Job 359
689
Job 360
456
Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of $500 on each job.
79. What is the ending balance of Finished Goods for Adams Company at the end of the first quarter?
a.
$456
b.
$1,067
c.
$1,685
d.
$2,752
80. What is the ending balance of Cost of Goods Sold for Adams Company at the end of the first quarter?
a.
$456
b.
$2,685
c.
$1,685
d.
$685
81. The controlling account for the job cost sheets is
a.
Finished Goods
b.
Materials
c.
Work in Process
d.
Cost of Goods Sold
82. Which of the following is the formula to compute the predetermined factory overhead rate?
a.
estimated total factory overhead costs divided by estimated activity base
b.
actual total factory overhead costs divided by estimated activity base
c.
estimated total factory overhead costs divided by actual activity base
d.
actual total factory overhead costs divided by actual activity base
83. The details concerning the costs incurred on each job order are accumulated in a work in process account and
supported by a
a.
stock ledger
b.
materials ledger
c.
cost ledger
d.
creditors ledger
Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the
year. Below is a list of all the jobs for the quarter:
Balance
Job 356
$ 450
Job 357
1,235
Job 358
378
Name:
Class:
Date:
Job 359
689
Job 360
456
Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of $500 on each job.
84. What is the gross profit for Adams Company at the end of the first quarter?
a.
$1,685
b.
$2,685
c.
$1,000
d.
$685
85. Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000 hours. The
total machine hours for the year were 54,300. The actual factory overhead for the year was $1,375,000. Determine the
over- or underapplied amount for the year.
a.
$17,500 overapplied
b.
$17,500 underapplied
c.
$118,250 overapplied
d.
$118,250 underapplied
86. During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders
and $25,000 for general factory use. Factory overhead applied to production was $32,000. The journal entry to record the
actual factory overhead costs incurred is
a.
Accounts Payable 25,000
Factory Overhead 25,000
b.
Factory Overhead 32,000
Accounts Payable 32,000
c.
Work in Process 25,000
Wages Payable 25,000
d.
Factory Overhead 25,000
Wages Payable 25,000
87. A separate account for each material is found in a
a.
general ledger
b.
materials ledger
c.
receiving report
d.
job cost sheet
88. Which of the following systems provides for a separate record of the cost of each particular quantity of product that
passes through the factory?
a.
job order cost system
b.
general cost system
c.
replacement cost system
d.
process cost system
89. The direct labor and overhead costs of providing services to clients are accumulated in
a.
Finished Services Expense
Name:
Class:
Date:
b.
Work in Process
c.
Administrative Salaries Expense
d.
Overhead
90. Aspen Technologies has the following budget data:
Estimated direct labor hours
15,000
Estimated direct labor dollars
$90,000
Estimated factory overhead costs
$198,000
If factory overhead is to be applied based on direct labor hours, the predetermined overhead rate is
a.
$7.50
b.
$13.20
c.
$2.20
d.
$16.50
91. The following budget data are available for Sharp Company:
Estimated direct labor hours
12,000
Estimated direct labor dollars
$90,000
Estimated factory overhead costs
$180,000
Actual direct labor hours
11,500
Actual direct labor dollars
$92,000
Actual factory overhead costs
$181,000
If factory overhead is applied based on direct labor hours, the amount of overhead to be applied is
a.
$180,000
b.
$181,000
c.
$172,500
d.
$184,000
92. At the end of the fiscal year, the balance in Factory Overhead is small. The balance will be
a.
transferred to Work in Process
b.
transferred to Cost of Goods Sold
c.
transferred to Finished Goods
d.
allocated between Work in Process and Finished Goods
93. Selected accounts with some amounts omitted are as follows:
Work in Process
Aug.
1
Balance
275,000
Aug.
31
Goods finished
1,030,000
31
Direct materials
X
31
Direct labor
450,000
31
Factory overhead
X
Name:
Class:
Date:
Factory Overhead
Aug.
1–31
Costs incurred
145,000
Aug.
1
Balance
15,000
31
Applied
X
If the balance of Work in Process on August 31 is $220,000, what was the amount debited to Work in Process for factory
overhead in August, assuming a factory overhead rate of 30% of direct labor costs?
a.
$135,000
b.
$10,000
c.
$120,000
d.
$70,000
94. If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a
a.
debit balance and be underapplied
b.
credit balance and be underapplied
c.
credit balance and be overapplied
d.
debit balance and be overapplied
95. Each document in the cost ledger is called a
a.
finished goods sheet
b.
stock record
c.
materials requisition
d.
job cost sheet
96. The journal entry to record the transfer of 1,600 units of Part No. 1177, with a value of $2.50 each, to work in process
is
a.
Materials 4,000
Work in Process 4,000
b.
Work in Process 4,000
Factory Overhead 4,000
c.
Work in Process 4,000
Materials 4,000
d.
Work in Process 4,000
Cash 4,000
97. For a manufacturing business, products that are in the process of being manufactured are referred to as
a.
supplies inventory
b.
work in process inventory
c.
finished goods inventory
d.
direct materials inventory
98. Sanders Inc. has applied $567,988 of overhead to jobs. Actual overhead at the end of the year is $575,000. The
adjustment for over- or underapplied overhead is
a.
$7,012 overapplied, increase Cost of Goods Sold
b.
$7,012 underapplied, increase Cost of Goods Sold
Name:
Class:
Date:
c.
$7,012 overapplied, decrease Cost of Goods Sold
d.
$7,012 underapplied, decrease Cost of Goods Sold
99. In a job order cost accounting system, the journal entry to record the flow of direct materials into production consists
of a
a.
debit to Work in Process and a credit to Materials
b.
debit to Materials and a credit to Work in Process
c.
debit to Factory Overhead and a credit to Materials
d.
debit to Work in Process and a credit to Supplies
100. Which of the following would most likely use a job order costing system?
a.
paper mill
b.
swimming pool installer
c.
company that manufactures chlorine for swimming pools
d.
oil refinery
101. The following budget data are available for Sharp Company:
Estimated direct labor hours
12,000
Estimated direct labor dollars
$90,000
Estimated factory overhead costs
$179,000
Actual direct labor hours
11,500
Actual direct labor dollars
$92,000
Actual factory overhead costs
$180,000
If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is
a.
199%
b.
196%
c.
$14.92
d.
$15.65
102. Selected accounts with amounts omitted are as follows:
Work in Process
Aug. 1
Balance
275,000
Aug. 31
Goods finished
1,030,000
31
Direct materials
X
31
Direct labor
450,000
31
Factory overhead
X
Factory Overhead
Aug. 1–
31
Costs incurred
145,000
Aug. 1
Balance
15,000
31
Applied
(30% of direct labor cost)
X
If the balance of Work in Process on August 31 is $220,000, what was the amount debited to Work in Process for direct
materials in August?
a.
$390,000
b.
$170,000
Name:
Class:
Date:
c.
$525,000
d.
$580,000
103. A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it
estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual manufacturing
overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the predetermined overhead
rate per direct labor hour?
a.
$12.00
b.
$10.00
c.
$12.57
d.
$10.48
104. The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished
products shipped to customers had production costs of $375,000. The journal entry to record the transfer of costs from
finished goods to cost of goods sold is
a.
Finished Goods 540,000
Cost of Goods Sold 540,000
b.
Finished Goods 375,000
Cost of Goods Sold 375,000
c.
Cost of Goods Sold 375,000
Finished Goods 375,000
d.
Cost of Goods Sold 540,000
Finished Goods 540,000
105. Which of the following is not a characteristic of a job order costing system?
a.
It accumulates cost for each department within the factory.
b.
It provides a separate record for the cost of each quantity of product that passes through the factory.
c.
It is best suited for industries that manufacture custom goods.
d.
It uses only one work in process account.
106. Which of the following are the two main types of cost accounting systems for manufacturing operations?
a.
process cost and general accounting systems
b.
job order cost and process cost systems
c.
job order and general accounting systems
d.
process cost and replacement cost systems
107. For which of the following businesses would the job order cost system be appropriate?
a.
canned soup processor
b.
oil refinery
c.
lumber mill
d.
hospital
Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the
year. Below is a list of all the jobs for the quarter:
Balance
Name:
Class:
Date:
Job 356
$ 450
Job 357
1,235
Job 358
378
Job 359
689
Job 360
456
Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of $500 on each job.
108. What is the ending balance of Work in Process for Adams Company at the end of the first quarter?
a.
$0
b.
$456
c.
$3,208
d.
$2,752
109. The materials requisition is used to
a.
release materials from the storeroom to the factory
b.
release finished goods to the shipping department
c.
record the acquisition of materials from a vendor
d.
record and electronically transmit materials data in place of a receiving report
110. Which of the following would be most likely to use process costing?
a.
custom furniture manufacturer
b.
auto body repair shop
c.
law firm
d.
lawn fertilizer manufacturer
111. Which of the following would not be found in the accounting system of a service provider?
a.
cost ledger
b.
finished goods ledger
c.
deferred revenue account
d.
job cost sheets
112. Reynolds Manufacturers Inc. has estimated total factory overhead costs of $95,000 and expected direct labor hours of
9,500 for the current fiscal year. If Job 117 incurs 2,300 direct labor hours, Work in Process will be debited and Factory
Overhead will be credited for
a.
$21,850
b.
$2,300
c.
$95,000
d.
$23,000
113. Journalizing the entry to record the application of factory overhead costs to jobs would include a credit to
a.
Factory Overhead
b.
Wages Payable
c.
Work in Process
d.
Cost of Goods Sold
Name:
Class:
Date:
114. All of the following are examples of activity bases except
a.
salaries of supervisors
b.
quality inspections of products
c.
number of machine setups
d.
raw materials storage
115. On which of the following would the labor costs for an individual job be recorded?
a.
clock cards
b.
in-and-out cards
c.
time tickets
d.
a payroll register
116. The basis for the journal entry recording direct labor for the period is a summary of the
a.
job order cost sheets
b.
time tickets
c.
employees’ earnings records
d.
clock cards
117. The amount of time spent by an employee on an individual job is recorded on a(n)
a.
pay stub
b.
in-and-out card
c.
time ticket
d.
employees’ earnings record
118. Which of the following types of inventories does a manufacturing business report on the balance sheet?
a.
finished goods inventory and work in process inventory only
b.
direct materials inventory and work in process inventory only
c.
direct materials inventory, work in process inventory, and finished goods inventory
d.
direct materials inventory and finished goods inventory only
119. In a job order cost accounting system used by a service business, which of the following items would normally not
be included as part of overhead?
a.
materials
b.
direct labor
c.
rent
d.
supplies
120. The following data were compiled from job cost sheets for similar products:
Date
Completed
Job
No.
Count
Direct
Labor Hours
Direct
Labor
Rate
per Hour
Total
Direct
Labor
Cost
Direct
Labor
Cost
per Unit
Direct
Labor
Hours
per Unit
May 4
Job 108
10
10
$20.00
$200.00
$20.00
1.00
May 20
Job 120
20
18
20.00
360.00
18.00
0.90
Name:
Class:
Date:
June 4
Job 160
16
13
20.00
260.00
16.25
0.81
June 30
Job 200
18
14
20.00
294.00
16.33
0.78
July 10
Job 218
28
22
20.00
462.00
16.50
0.79
July 18
Job 230
30
23
20.00
483.00
16.10
0.77
Based on the trends you can observe in the data, which of the following is likely true?
a.
Production processes are becoming more efficient.
b.
Increased production efficiencies are exactly offsetting increased labor costs.
c.
Increased labor costs are outweighing increases in production efficiencies.
d.
In the wake of increasing labor costs, management needs to address production inefficiencies.
121. Materials purchased on account during the month totaled $190,000. Materials requisitioned and placed in production
totaled $165,000. The journal entry to record the materials purchased on account is
a.
Materials 165,000
Accounts Payable 165,000
b.
Materials 190,000
Accounts Payable 190,000
c.
Materials 190,000
Cash 190,000
d.
Accounts Payable 190,000
Materials 190,000
Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the
year. Below is a list of all the jobs for the quarter:
Balance
Job 356
$ 450
Job 357
1,235
Job 358
378
Job 359
689
Job 360
456
Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of $500 on each job.
122. What is the balance of Sales for Adams Company at the end of the first quarter?
a.
$1,685
b.
$2,685
c.
$1,000
d.
$685
123. The document authorizing the issuance of materials from the storeroom is a
a.
materials requisition
b.
purchase requisition
c.
receiving report
d.
purchase order
124. Journalizing the entry to record jobs shipped and customers billed would include a credit to
Name:
Class:
Date:
a.
Accounts Payable
b.
Cash
c.
Finished Goods
d.
Cost of Goods Sold
125. Journalizing the entry to record the indirect labor costs incurred for general factory use would include a debit to
a.
Factory Overhead
b.
Wages Payable
c.
Wages Expense
d.
Cost of Goods Sold
126. When Job 117 was completed, direct materials totaled $4,400; direct labor, $5,600; and factory overhead, $2,400. A
total of 1,000 units were produced at a per-unit cost of
a.
$12,400
b.
$1,240
c.
$124
d.
$12.40
127. For which of the following businesses would the process cost system be appropriate?
a.
custom cabinet maker
b.
landscaper
c.
paper mill
d.
catering firm
128. A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it
estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual manufacturing
overhead costs incurred were $377,200, and actual direct labor hours were 36,000. The journal entry to apply the factory
overhead costs for the year would include a
a.
debit to Factory Overhead for $360,000
b.
credit to Factory Overhead for $432,000
c.
debit to Factory Overhead for $377,200
d.
credit to Factory Overhead for $360,000
129. The journal entry to record the purchase of $45,000 of raw materials is
a.
Materials 45,000
Accounts Receivable 45,000
b.
Materials 45,000
Accounts Payable 45,000
c.
Inventory 45,000
Accounts Receivable 45,000
d.
Inventory 45,000
Cash 45,000
130. Which of the following is the correct flow of manufacturing costs?
a.
raw materials, work in process, finished goods, cost of goods sold
Name:
Class:
Date:
b.
raw materials, finished goods, cost of goods sold, work in process
c.
work in process, finished goods, raw materials, cost of goods sold
d.
cost of goods sold, raw materials, work in process, finished goods
131. Which of the following costs are not included in finished goods inventory?
a.
direct labor
b.
factory overhead
c.
chief financial officer’s salary
d.
direct materials
132. Selected accounts with a credit amount omitted are as follows:
Work in Process
Apr. 1
Balance
7,000
Apr. 30
Goods finished
X
30
Direct materials
78,400
30
Direct labor
195,000
30
Factory overhead
136,500
Finished Goods
Apr. 1
Balance
42,000
30
Goods finished
387,000
What was the balance of Work in Process as of April 30?
a.
$8,100
b.
$35,000
c.
$29,900
d.
$22,900
Match the costs that follow to the type of product cost (a–c) or designate as not a product cost (d).
a.
Direct labor
b.
Direct materials
c.
Factory overhead
d.
Not a product cost
133. Factory depreciation
134. President’s salary
135. Salespersons’ commissions
136. Wood
137. Factory supervisor’s salary
138. Assembler’s wages
139. Plastic parts
Name:
Class:
Date:
140. Machine operator’s wages
141. Maintenance supplies
Match each of the following phrases with the term (a–e) that most closely describes it. Each term will be used only once.
a.
Job cost sheets
b.
Materials requisitions
c.
Receiving report
d.
Time tickets
e.
Cost allocation
142. Process by which factory overhead is assigned to a cost object
143. These make up the work in process subsidiary ledger
144. Serves as the basis for recording direct labor on a job cost sheet
145. Prepared when materials that have been ordered are received and inspected
146. Serves as the basis for recording materials used
Match each of the following phrases with the term (a–g) that it most closely describes.
a.
Job order cost system
b.
Process cost system
c.
Activity-based costing
d.
Underapplied overhead
e.
Overapplied overhead
f.
Finished goods ledger
g.
Materials ledger
147. A system that uses a different overhead rate for each activity
148. A subsidiary ledger that maintains a separate account for each type of material
149. Applied overhead is more than actual overhead incurred
150. Typically used by companies that make custom products
151. Typically used by companies whose products are indistinguishable from each other
152. Stock ledger
153. Applied overhead is less than actual overhead incurred
Match each of the following costs with the appropriate classification (a–e).
Name:
Class:
Date:
a.
Product cost – direct materials
b.
Product cost – direct labor
c.
Product cost – factory overhead
d.
Period cost – selling expense
e.
Period cost – administrative expense
154. Telephone cable for a telephone company
155. Membership fees for a health club for executives
156. Salary of the director of internal auditing
157. Long-distance telephone bill for calls made by salespersons
158. Carrying cases for a manufacturer of video camcorders
159. Cotton for a textile manufacturer of blue jeans
160. Bandages for the emergency room of a hospital
161. Cost of company holiday party
162. Electricity used to operate factory machinery
163. State unemployment compensation taxes for factory workers
164. Gloves for factory machine operators
165. Fees paid for lawn service for office grounds
166. Salary of secretary to vice president of finance
167. Salary of secretary to vice president of marketing
168. Production supervisor’s salary
169. Engine oil for manufacturer and distributor of motorcycles
170. Oil lubricants for factory plant and equipment
171. Cost of a radio commercial
172. Depreciation on factory equipment
173. Wages of checkout clerk in company-owned retail outlet
174. Maintenance and repair costs for factory equipment
175. Depreciation on office equipment
Name:
Class:
Date:
176. Bonuses paid to salespersons
177. Insurance on factory building
178. Training for accounting personnel on use of microcomputer
179. Steel for a construction contractor
180. Technics Inc., a manufacturing company, utilizes job order costing. Each division establishes its own estimates
regarding overhead, which are as follows:
Division A Division B
Total estimated overhead $128,000 $261,000
Total estimated machine hours 16,000 72,500
Total estimated direct labor costs $155,000 $290,000
If Division A allocates overhead on the basis of machine hours and Division B allocates overhead as a percentage of
direct labor costs, what would the predetermined overhead rate be for each division?
181. Discuss the use of job order costing for professional services businesses. What are the similarities and differences
between service and manufacturing business job order costing?
182. Jase Company allocates overhead based on a predetermined overhead rate of $9 per direct labor hour. Job J904
required 8 tons of direct material at a cost of $600 per ton and took employees who earn $21 per hour a total of 80 hours
to complete. What is the total cost of Job J904?
183. Cranston Company estimates the following overhead costs for the coming year:
Equipment depreciation $160,000
Equipment maintenance 60,000
Supervisory salaries 40,000
Factory rent 100,000
Total $360,000
Cranston is also budgeting $600,000 in direct labor costs and 15,000 machine hours for the coming year.
a. Compute the predetermined overhead rate using direct labor costs as the allocation base.
b. Compute the predetermined overhead rate using machine hours as the allocation base.
184. At the end of the period, Carson Company had the following balances in selected accounts:
Materials $ 80,000
Finished Goods 190,000
Work in Process 70,000
Cost of Goods Sold 1,000,000
Factory Overhead 30,000
a. The factory overhead balance is relatively small; prepare the journal entry to close the factory
overhead account assuming a debit balance. What does a debit balance mean?
b. The factory overhead balance is relatively small; prepare the journal entry to close the factory
Name:
Class:
Date:
overhead account assuming a credit balance. What does a credit balance mean?
185. At the end of April, Cavy Company had completed Jobs 766 and 765. The individual job cost sheets reveal the
following information:
Job
Direct Materials
Direct Labor
Machine Hours
Job 765
$5,670
$3,500
27
Job 766
8,900
4,775
44
Job 765 produced 152 units, and Job 766 consisted of 250 units.
Assuming that the predetermined overhead rate is applied by using machine hours at a rate of $200 per hour, determine
the (a) balance on the job cost sheets for each job and (b) the cost per unit at the end of April.
186. Six selected transactions for the current month are indicated by letters in the following T accounts in a job order cost
accounting system:
Materials
Work in Process
(a)
(a)
(d)
(b)
(c)
Wages Payable
(f)
(b)
Factory Overhead
Finished Goods
(a)
(c)
(d)
(e)
(b)
(f)
(f)
Cost of Goods Sold
(e)
(f)
Describe each of the six transactions.
187. Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000 hours. The
total machine hours for the year were 54,300 hours. The actual factory overhead for the year was $1,375,000.
a. Determine the total factory overhead amount applied.
b. Compute the over- or underapplied amount for the year.
c. Journalize the entry to transfer the over- or underapplied factory overhead to cost of goods sold.
188. Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000 hours. The
total machine hours for the year were 54,300. The actual factory overhead for the year was $1,348,800.
a. Determine the total factory overhead amount applied.
b. Compute the over- or underapplied amount for the year.
c. Journalize the entry to transfer the over- or underapplied factory overhead to cost of goods sold.
189. On May 15, the Stamping Department accepted Job 051507A to make 1,000 funnels. Materials requisitioned were
1,100 sheets at $1.20 per sheet and 1,150 grommets at $0.15 per set. The cost driver used by the Stamping Department is
the drop-forge strokes indicated by a machine-mounted counter. Overhead is applied at $2.25 for each drop-forge stroke.
Name:
Class:
Date:
Additionally, $375.00 of overhead is applied to each job due to setup and tear down. Assume the number of drop-forge
strokes is 1,115. Direct labor is applied at $22.50 per hour for the machine operator and $11.10 for the machine loader.
The job required 6.5 hours of labor.
Upon completion, the job was transferred to finished goods inventory.
Journalize the entries to record all events as of May 15.
190. On November 2, Newsprint Manufacturing purchases 5 rolls of paper on account at $125 per roll for use within the
production process. On November 5, 4 rolls of this paper are issued to Job 157A in the Printing Department. The Printing
Department applies $675 in direct labor and $1,150 of factory overhead to Job 157A. On November 8, Printing transfers
Job 157A to the Folding Department. The Folding Department applies $450 in direct labor and $655 in factory overhead
to Job 157A. Job 157A is transferred to finished goods inventory on November 9.
a.
Journalize the entry to record the purchase of the paper.
b.
Journalize the entries to record the transfer of raw materials to work in process, the
application of direct labor, and the application of manufacturing overhead to Job 157A
while in the Printing Department.
c.
Journalize the entries to record the transfer of Job 157A to the Folding Department at
actual cost.
d.
Journalize the entries to record the application of direct labor and the application of
manufacturing overhead to Job 157A while in the Folding Department.
e.
Journalize the entry to record the transfer of Job 157A to finished goods inventory at
actual cost.
191. Put the following in the order of the flow of manufacturing costs for a company.
a. Close under- or overapplied factory overhead to Cost of Goods Sold
b. Purchase materials
c. Use factory labor and incur factory overhead in production
d. Transfer completed jobs to finished goods
e. Apply factory overhead to jobs according to the predetermined overhead rate
f. Requisition materials to jobs
g. Upon sale, move cost of finished product to Cost of Goods Sold
192. On November 14, the Milling Department accepted Job 111407A for 1,000 pounds of cereal mix.
Materials:
Standard Qty.
Standard Cost
Oats
525 pounds
$1.25 per pound
Wheat
450 pounds
$1.15 per pound
Barley
85 pounds
$1.45 per pound
Malt
65 pounds
$2.15 per pound
Honey
25 quarts
$1.20 per quart
Water
25 gallons
$0.45 per gallon
Time:
Miller
4 1/2 hours
$22.75 per hour
Loader
1 1/2 hours
$11.50 per hour
Overhead is applied at $5.75 per pound completed. The recipe produced 1,025 pounds of cereal mix.
Name:
Class:
Date:
a.
Journalize the entry to record the transfer of raw materials to Job 111407A.
b.
Journalize the entry to record the direct labor incurred for Job 111407A.
c.
Journalize the entry to record the manufacturing overhead applied to Job 111407A.
d.
Journalize the entry to record the transfer of Job 111407A to Finished Goods on
November 14.
193. Cavy Company completed 26,000 units during the year at a cost of $2,139,800. The beginning finished goods
inventory was 5,000 units valued at $405,000. Assuming a FIFO cost flow, determine the cost of goods sold for 20,000
units.
194. Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours. The
machine hours for the month of April for all of the jobs were 4,780. If the actual factory overhead for April totaled
$141,800, determine the over- or underapplied amount for the month.
195. A summary of the time tickets for August follows:
Description
Amount
Description
Amount
Job 321
$11,000
Job 342
$8,300
Job 329
9,200
Job 346
5,700
Job 336
5,000
Indirect labor
8,000
Journalize the entries to record (a) the labor cost incurred and (b) the application of factory overhead to production for
August. The factory overhead rate is 70% of direct labor cost.
196. Cavy Company estimates that total factory overhead costs will be $660,000 for the year. Direct labor hours are
estimated to be 100,000.
a. Compute the predetermined factory overhead rate.
b. Determine the amount of factory overhead applied to Job 345 if the amount of direct labor hours is 560 and to Job 777
if the amount of direct labor hours is 800.
c. Journalize the entry to record the factory overhead applied if Jobs 345 and 777 are the only jobs for the period.
197. List the accounts used in the cost flow for (a) a manufacturer and (b) a service provider.
198. Journalize the entries to record the following transactions:
1.
Mar. 10: 500 units of raw materials were purchased on account at $4.00 per unit.
2.
Mar. 15: 250 units of raw materials were requisitioned at $4.50 per unit for production, Job 872.
3.
Mar. 25: 215 units of raw materials were requisitioned at $5.00 per unit for production, Job 879.
199. National Survey Company uses a job order cost system.
a.
Indicate the source of the data for debiting Work in Process for each of the following:
1.
Direct materials requisitioned
2.
Direct labor used
b.
Indicate the source of the data for crediting Work in Process for jobs completed.
c.
Present a list of the three controlling accounts used in the general ledger to record the
Name:
Class:
Date:
Determine the cost of each of the issuances under a perpetual system, using the FIFO method.
inventories and, in each case, indicate the related subsidiary ledger.
200. Cavy Company accumulated 560 hours of direct labor on Job 345 and 800 hours on Job 777. The direct labor was
incurred at a rate of $20 per direct labor hour for Job 345 and $21 per direct labor for Job 777. Journalize the entry to
record the flow of labor costs into production.
201. Crain Company budgeted 35,000 direct labor hours and incurred 40,000 of actual direct labor hours. It estimated
overhead of $735,000 and incurred $780,000 of actual overhead.
What is Crain’s predetermined overhead rate? Was overhead overapplied or underapplied for the year? By how much?
202. Discuss how job order cost information is used in decision making. What are some possible reasons that the actual
costs of materials would exceed expected costs for a job?
203. Journalize the entries to record the following summarized operations related to production for a company using a job
order cost system:
a.
Materials purchased on account
$176,000
b.
Prepaid expenses incurred on account
12,200
c.
Materials requisitioned:
For production orders
153,700
For general factory use
2,700
d.
Factory labor used:
On production orders
141,300
For general factory purposes
12,000
e.
Depreciation on factory equipment
37,000
f.
Expiration of prepaid expenses, chargeable to factory
6,100
g.
Factory overhead costs incurred on account
76,000
h.
Factory overhead applied, based on machine hours
105,300
i.
Jobs finished
415,300
j.
Jobs shipped to customers: Cost
412,000
Selling price (assume all sold on account)
638,000
204. Flagler Company allocates overhead based on machine hours. It estimated overhead costs for the year to be
$420,000. Estimated machine hours were 50,000. Actual hours and costs for the year were 46,000 machine hours and
$380,000 of overhead.
a. Compute the overhead rate for the year.
b. What is the amount of applied overhead for the year?
c. What is the amount of under- or overapplied overhead for the year?
205. The balance of Material Q on May 1 and the receipts and issuances during May are as follows:
Balance, May 1
8 at $32
Received, May 11
23 at $33
Received, May 25
15 at $35
Issued, May 17
14
Issued, May 27
18
Name:
Class:
Date:
206. During April, Cavy Company incurred factory overhead as follows:
Indirect materials
$11,000
Factory supervision labor
4,000
Utilities
500
Depreciation (factory)
700
Small tools
300
Equipment rental
750
Journalize the entry to record the factory overhead incurred during April.
207. Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company has
determined that the basis for applying factory overhead will be machine hours, which is estimated to be 40,000 hours.
There are 4,780 machine hours for all of the jobs in the month of April. What amount will be applied to all of the jobs for
the month of April?
208. During August, the receipts and distributions of Material No. B4G9 are as follows:
Received
Aug. 3
1,100 units at $15
16
1,700 units at $17
29
900 units at $18
Issued
Aug. 11
700 units for Job 116
18
1,900 units for Job 117
30
800 units for Job 118
a.
Determine the cost of each of the three issues under a perpetual system, using the first-in,
first-out method.
b.
Journalize a summary entry to record the issuance of the materials for the month, assuming
that the cost of issuances is determined by the first-in, first-out method.
209. Cavy Company estimates that the factory overhead for the following year will be $1,470,000. The company has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours. The
machine hours for the month of April for all of the jobs were 4,780. Journalize the entry to record the factory overhead
applied in April.
210. Cavy Company estimates that the factory overhead for the following year will be $1,470,000. The company has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours.
Compute the predetermined overhead rate to apply factory overhead.
211. Journalize the entry to record the use of materials and labor, based on the following:
Raw materials issued: Job 609, $850; for general use in factory, $600
Labor time tickets: Job 609, $1,600; $400 for supervision
212. Define and discuss the two main types of cost accounting systems for manufacturing operations.
213. The following account appears in the ledger after only part of the postings have been completed for July, the first
month of the current fiscal year:
Name:
Class:
Date:
Work in Process
July 1 Balance
60,200
Direct materials
147,000
Direct labor
120,000
Factory overhead is applied to jobs at the rate of 60% of direct labor cost. The actual factory overhead incurred for July
was $75,000. Jobs completed during the month totaled $301,200.
a.
Journalize the entries to record (1) the application of factory overhead to production during
July and (2) the jobs completed during July.
b.
What is the balance of the factory overhead account on July 31?
c.
Was factory overhead overapplied or underapplied on July 31?
d.
Determine the balance of Work in Process on July 31.
Name:
Class:
Date:
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Class:
Date:
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Class:
Date:
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Class:
Date:
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Class:
Date:
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Class:
Date:
Name:
Class:
Date:
Name:
Class:
Date:
Name:
Class:
Date:
Name:
Class:
Date:
Name:
Class:
Date:
Name:
Class:
Date:
Name:
Class:
Date:
Name:
Class:
Date: