Job Order Costing

Question 1

Which of the following products probably would be manufactured using a job order costing system?

a. Number 2 pencils
b. Computer monitors.
c. Wedding invitations.
d. Paper.

Answer 1

c. Wedding invitations.

Question 2

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 Statement of Financial Position?

a. Overapplied, deferred credit
b. Underapplied, deferred debit
c. Underapplied, deferred credit
d. Overapplied, deferred debit

Answer 2

b.Underapplied, deferred debit

Question 3

At the end of the fiscal year, the balance in Factory Overhead is small. This balance would normally 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

Answer 3

b. transferred to Cost of Goods Sold

Question 4

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

Answer 4

a. debit balance and be underapplied

Question 5

Which of the following is the correct formula to calculate 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.

Answer 5

a. Estimated total factory overhead costs divided by estimated activity base.

Question 6

Underapplied overhead means

a. too little overhead was applied to raw materials.
b. actual overhead is greater than estimated overhead.
c. finished goods will need to be credited.
d. there is a debit balance remaining in the overhead account

Answer 6

d. there is a debit balance remaining in the overhead account

Question 7

Overhead costs are underapplied if the amount applied to Work in Process is

a. greater than estimated overhead.
b. less than estimated overhead.
c. greater than actual overhead incurred.
d. less than actual overhead incurred.

Answer 7

d. less than actual overhead incurred.

Question 8

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

Answer 8

a. raw materials, work in process, finished goods, cost of goods sold

Question 9

The document authorizing the issuance of materials from the storeroom is a

a. materials requisition
b. purchase requisition
c. receiving report
d. purchase order

Answer 9

a. materials requisition

Question 10

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

Answer 10

a. debit to Work in Process and a credit to Materials

Question 11

In job-order costing, all of the following statements are correct with respect to labor time and cost except:

a. Time tickets are kept by employees showing the amount of work on specific jobs.
b. The job cost sheet for a job will contain all direct labor charges to that particular jobs.
c. Labor cost that can be traced to a job only with a great deal of effort is treated as part of manufacturing overhead.
d. A machine operator performing routine annual maintenance work on a piece of equipment would charge the maintenance time to a specific job.

Answer 11

d. A machine operator performing routine annual maintenance work on a piece of equipment would charge the maintenance time to a specific job.

Question 12

In a job order cost system, the journal entry to record the application of overhead cost to jobs would include:

a. A credit to the Manufacturing Overhead account.
b. A credit to the Work in Process inventory account.
c. A debit to Cost of Goods Sold.
d. A debit to the Manufacturing Overhead account.

Answer 12

a. A credit to the Manufacturing Overhead account.

Question 13

A process cost accounting system provides for a separate record of the cost of each particular quantity of product that passes through the factory.

True/False

Answer 13

False (job order cost system)

Question 14

The process cost system is appropriate where few products are manufactured and each product is made to customers’ specifications.

True/False

Answer 14

False (job order cost system)

Question 15

A job order cost system would be appropriate for a crude oil refining business.

True/False

Answer 15

False (process cost accounting system)

Question 16

Perpetual inventory controlling accounts and subsidiary ledgers are maintained for materials, work in process, and finished goods in job order costing systems.

True/False

Answer 16

True

Question 17

When the goods are sold, their costs are transferred from Work in Process to Finished Goods.

True/False

Answer 17

False (transferred from finished goods to cost of goods sold)

Question 18

f factory overhead applied exceeds the actual costs, the factory overhead account will have a credit balance.

True/False

Answer 18

True

Question 19

If the underapplied factory overhead amount is immaterial, it is transferred to Cost of Goods Sold at the end of the fiscal year.

True/False

Answer 19

True

Question 20

Each account in the work in process subsidiary ledger in a job order costing system is called a job cost sheet.

True/False

Answer 20

True

Question 21

A manufacturing business reports just two types of inventory on its balance sheet: work in process inventory and finished goods inventory.

True/False

Answer 21

False (Three types of inventory: materials, WIP and FG)

Question 22

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, are reported as direct materials inventory.

True/False

Answer 22

False (work in process inventory)