Question 1

Process costing is used when

Accepted Answer

A) the production process is continuous. 
B) production is aimed at filling a specific customer order. 
C) dissimilar products are involved. 
D) costs are to be assigned to specific jobs. 
A) the production process is continuous. 
B) production is aimed at filling a specific customer order. 
C) dissimilar products are involved. 
D) costs are to be assigned to specific jobs.

Question 2

Factory labor should be assigned to selling and administrative expenses on a proportionate basis.

Accepted Answer

A) True 
 B)False

Question 3

There should be a separate job cost sheet for each job.

Accepted Answer

A) True 
 B)False

Question 4

The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity expressed in terms of a common activity base.

Accepted Answer

A) True 
 B)False

Question 5

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

Accepted Answer

A) True 
 B)False

Question 6

If annual overhead costs are expected to be $750,000 and direct labor costs are expected to be $1,000,000, then if the activity base is direct labor costs:

Accepted Answer

A) $1.33 is the predetermined overhead rate. 
B) for every dollar of manufacturing overhead, 75 cents of direct labor will be assigned. 
C) for every dollar of direct labor, 75 cents of manufacturing overhead will be assigned. 
D) a predetermined overhead rate cannot be determined. 
A) $1.33 is the predetermined overhead rate. 
B) for every dollar of manufacturing overhead, 75 cents of direct labor will be assigned. 
C) for every dollar of direct labor, 75 cents of manufacturing overhead will be assigned. 
D) a predetermined overhead rate cannot be determined.

Question 7

At the beginning of the year, Monroe Company estimates annual overhead costs to be $2,400,000 and that 300,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 315,000 hours is

Accepted Answer

A) $2,400,000. 
B) $2,285,714. 
C) $1,680,000. 
D) $2,520,000. 
A) $2,400,000. 
B) $2,285,714. 
C) $1,680,000. 
D) $2,520,000.

Question 8

Time tickets should be approved by

Accepted Answer

A) the audit committee. 
B) co-workers. 
C) the employee's supervisor. 
D) the payroll department. 
A) the audit committee. 
B) co-workers. 
C) the employee's supervisor. 
D) the payroll department.

Question 9

Manufacturing overhead applied is added to direct labor incurred and to what other item to equal total manufacturing costs for the period?

Accepted Answer

A) Goods available for sale. 
B) Raw materials purchased. 
C) Work in process. 
D) Direct materials used. 
A) Goods available for sale. 
B) Raw materials purchased. 
C) Work in process. 
D) Direct materials used.

Question 10

In a job order cost system, each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets.

Accepted Answer

A) True 
 B)False

Question 11

As of December 31, 2017, Nilsen Industries had $2,000 of raw materials inventory. At the beginning of 2017, there was $1,600 of materials on hand. During the year, the company purchased $354,000 of materials; however it paid for only $314,000. How much inventory was requisitioned for use on jobs during 2017?

Accepted Answer

A) $354,400 
B) $344,400 
C) $343,600 
D) $353,600 
A) $354,400 
B) $344,400 
C) $343,600 
D) $353,600

Question 12

Recording the acquisition of raw materials is a part of accumulating manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 13

Actual manufacturing overhead costs should be charged to the Work in Process Inventory account as they are incurred.

Accepted Answer

A) True 
 B)False

Question 14

Total manufacturing costs for a period consists of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period.

Accepted Answer

A) True 
 B)False

Question 15

Vektek, Inc. thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $2,050,000. The company used 1,000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $2,100,000. The budgeted machine hours for the year totaled 20,000. How much overhead should be applied to Job No. B12?

Accepted Answer

A) $2,100 
B) $102,500 
C) $105,000 
D) $2,050 
A) $2,100 
B) $102,500 
C) $105,000 
D) $2,050

Question 16

If actual overhead is greater than applied manufacturing overhead, then manufacturing overhead is:

Accepted Answer

A) underapplied. 
B) overapplied. 
C) a loss on the income statement under "Other Expenses and Losses." 
D) considered a miscellaneous expense. 
A) underapplied. 
B) overapplied. 
C) a loss on the income statement under "Other Expenses and Losses." 
D) considered a miscellaneous expense.

Question 17

When raw materials are received, there is no effort at this point to associate the cost of materials with specific jobs.

Accepted Answer

A) True 
 B)False

Question 18

For Jacobs Company, the predetermined overhead rate is 70% of direct labor cost. During the month, $600,000 of factory labor costs are incurred of which $140,000 is indirect labor. Actual overhead incurred was $320,000. The amount of overhead debited to Work in Process Inventory should be:

Accepted Answer

A) $322,000 
B) $320,000 
C) $420,000 
D) $460,000 
A) $322,000 
B) $320,000 
C) $420,000 
D) $460,000

Question 19

A job order cost system identifies costs with a particular job rather than with a set time period.

Accepted Answer

A) True 
 B)False

Question 20

When determining costs of jobs, how does a company account for indirect materials?

Accepted Answer

A) It is added to work in process as used. 
B) It remains part of raw materials inventory. 
C) It is transferred out of raw materials into manufacturing overhead when used. 
D) It is transferred out of raw materials into work in process as used. 
A) It is added to work in process as used. 
B) It remains part of raw materials inventory. 
C) It is transferred out of raw materials into manufacturing overhead when used. 
D) It is transferred out of raw materials into work in process as used.

Exam 14: Job Order Costing

Process costing is used when

Factory labor should be assigned to selling and administrative expenses on a proportionate basis.

There should be a separate job cost sheet for each job.

The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity expressed in terms of a common activity base.

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

If annual overhead costs are expected to be $750,000 and direct labor costs are expected to be $1,000,000, then if the activity base is direct labor costs:

At the beginning of the year, Monroe Company estimates annual overhead costs to be $2,400,000 and that 300,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 315,000 hours is

Time tickets should be approved by

Manufacturing overhead applied is added to direct labor incurred and to what other item to equal total manufacturing costs for the period?

In a job order cost system, each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets.

Recording the acquisition of raw materials is a part of accumulating manufacturing costs.

Actual manufacturing overhead costs should be charged to the Work in Process Inventory account as they are incurred.

Total manufacturing costs for a period consists of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period.

If actual overhead is greater than applied manufacturing overhead, then manufacturing overhead is:

When raw materials are received, there is no effort at this point to associate the cost of materials with specific jobs.

For Jacobs Company, the predetermined overhead rate is 70% of direct labor cost. During the month, $600,000 of factory labor costs are incurred of which $140,000 is indirect labor. Actual overhead incurred was $320,000. The amount of overhead debited to Work in Process Inventory should be:

A job order cost system identifies costs with a particular job rather than with a set time period.

When determining costs of jobs, how does a company account for indirect materials?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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