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CHAPTER 17(2): JOB ORDER COSTING
1.
Cost accounting systems measure, record, and report product costs.
a.
True
b.
False
2.
A manufacturer may employ a job order cost system for some of its products and a process cost system for others.
a.
True
b.
False
3.
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
4.
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
b.
False
5.
A process cost accounting system provides product costs for each of the departments or processes within the
factory.
a.
True
b.
False
6.
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
7.
The process cost system is appropriate where few products are manufactured and each product is made to
customers'
specifications.
a.
True
b.
False
8.
A job order cost system would be appropriate for a crude oil refining business.
a.
True
b.
False
9.
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
10.
When the goods are sold, their costs are transferred from Work in Process to Finished Goods.
a.
True
b.
False
11.
The materials requisition serves as the source document for debiting the accounts in the materials ledger.
a.
True
b.
False
12.
Materials are transferred from the storeroom to the factory in response to materials requisitions.
a.
True
b.
False
13.
The document that serves as the basis for recording direct labor on a job cost sheet is the clock card.
a.
True
b.
False
14.
The document that serves as the basis for recording direct labor on a job cost sheet is the time ticket.
a.
True
b.
False
15.
Depreciation expense on factory equipment is part of factory overhead cost.
a.
True
b.
False
16.
Factory overhead is applied to production using a predetermined overhead rate.
a.
True
b.
False
17.
If factory overhead applied exceeds the actual costs, the factory overhead account will have a credit balance.
a.
True
b.
False
18.
If factory overhead applied exceeds the actual costs, overhead is said to be under applied.
a.
True
b.
False
19.
If the under applied factory overhead amount is immaterial, it is transferred to Cost of Goods Sold at the end of the
fiscal year.
a.
True
b.
False
20.
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
21.
In the job order costing system, the finished goods account is the controlling account for the factory overhead
ledger.
a.
True
b.
False
22.
The inventory accounts generally maintained by a manufacturing firm are only finished goods and materials.
a.
True
b.
False
23.
Generally accepted accounting principles require companies to use only one factory overhead rate for product
costing.
a.
True
b.
False
24.
Activity-based costing is a method of accumulating and allocating costs by department.
a.
True
b.
False
25.
Interim financial statements for a manufacturing business would report over applied factory overhead as a deferred
item on the balance sheet.
a.
True
b.
False
26.
The debit to factory overhead for the cost of indirect materials is obtained from the summary of the materials
requisitions.
a.
True
b.
False
27.
In a factory with several processing departments, a single factory overhead rate may not provide accurate product
costs and effective cost control.
a.
True
b.
False
28.
Nonmanufacturing costs are generally classified into two categories: selling and administrative.
a.
True
b.
False
29.
The current year's advertising costs are normally considered period costs.
a.
True
b.
False
30.
Direct labor cost is an example of a period cost.
a.
True
b.
False
31.
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
32.
On the balance sheet for a manufacturing business, the cost of direct materials, direct labor, and factory overhead,
which have entered into the manufacturing process but are associated with products that have not been finished, is
reported as direct materials inventory.
a.
True
b.
False
33.
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
34.
A receiving report is prepared when purchased materials are first received by the manufacturing department.
a.
True
b.
False
35.
Period costs are costs that are incurred for the production requirements of a certain period.
a.
True
b.
False
36.
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
37.
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
38.
Job order cost accounting systems may be used to evaluate a company's efficiency.
a.
True
b.
False
39.
Information about costs developed through a job order cost system cannot be used to evaluate an organization’s cost
performance.
a.
True
b.
False
40.
Job order cost accounting systems may be used for planning and controlling a service business.
a.
True
b.
False
41.
The job order costing system is used by service firms to determine revenues, expenses, and ultimately profit.
a.
True
b.
False
42.
The job order costing system is not used by service organizations.
a.
True
b.
False
43.
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
44.
Job order cost accounting systems can be used only for companies that manufacture a product.
a.
True
b.
False
45.
The direct labor and overhead costs of providing services to clients are accumulated in a work in process account.
a.
True
b.
False
46.
In a job order cost accounting system for a service business, materials costs are normally included as part of
overhead.
a.
True
b.
False
47.
A service organization will not use the job order costing method because it has no direct materials.
a.
True
b.
False
48.
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
49.
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
50.
Which of the following would most likely use a job order costing system?
a.
a paper mill
b.
a swimming pool installer
c.
a company that manufactures chlorine for swimming pools
d.
an oil refinery
51.
Which of the following would be most likely to use process costing?
a.
a custom furniture manufacturer
b.
an auto body repair shop
c.
a law firm
d.
a lawn fertilizer manufacturer
52.
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
53.
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
54.
For which of the following businesses would the process cost system be appropriate?
a.
a custom cabinet maker
b.
a landscaper
c.
a paper mill
d.
a catering firm
55.
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.
56.
Which of the following products would be manufactured using a job order costing system?
a.
a cell phone
b.
a highlighter pen
c.
a graduation invitation
d.
a recliner
57.
Job order costing and process costing are
a.
pricing systems
b.
cost accounting systems
c.
cost flow systems
d.
inventory tracking systems
58.
Which of the following is not a reason a service firm would use a job order costing system?
a.
to help control costs
b.
to determine client billing
c.
to determine department costs within the firm
d.
to determine profit
59.
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
60.
Which of the following is the correct flow of manufacturing costs?
a.
raw materials, work in process, finished goods, cost of goods sold
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
61.
Which of the following would record the labor costs to an individual job?
a.
clock cards
b.
in-and-out cards
c.
time tickets
d.
a payroll register
62.
The 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
63.
The 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
the 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 over applied
b.
$1,000,000 under applied
c.
$500,000 over applied
d.
$500,000 under applied
