Question 1

The job order costing system is used by service firms to determine revenues, expenses, and ultimately profit.

Accepted Answer

A) True 
 B)False

Question 2

For which of the following businesses would the process cost system be appropriate?

Accepted Answer

A)  a custom cabinet maker 
B)  a landscaper 
C)  a paper mill 
D)  a catering firm 
A)  a custom cabinet maker 
B)  a landscaper 
C)  a paper mill 
D)  a catering firm

Question 3

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. In addition, factory overhead charged to production was $32,000. The entry to record the direct labor costs is

Accepted Answer

A)  Work in Process Wages Payable
150,000
150,000 
B)  Work in Process Wages Payable
175,000
175,000 
C)  Wages Payable Work in Process
175,000
175,000 
D)  Wages Payable Work in Process
150,000
150,000 
A)  Work in Process Wages Payable
150,000
150,000 
B)  Work in Process Wages Payable
175,000
175,000 
C)  Wages Payable Work in Process
175,000
175,000 
D)  Wages Payable Work in Process
150,000
150,000

Question 4

At the end of April, Cavy Company had completed Jobs 766 and 765. The individual job cost sheets reveal the following information: $$\begin{array} { | l | l | l | l | } 
\hline \text { Job } & \text { Direct Materials } & \text { Direct Labor } & \text { Machine Hours } \
\hline \text { Job No. } 765 & \$ 5,670 & \$ 3,500 & 27 \
\hline \text { Job No. } 766 & \$ 8,900 & \$ 4,775 & 44 \
\hline
\end{array}$$ 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.

Accepted Answer

a) Job No. 765 = $14,570 $5,67

Question 5

Match each of the following phrases with the term a-g) that it most closely describes.
-applied overhead is more than actual overhead incurred

Accepted Answer

A) job order cost system 
B) process cost system 
C) activity-based costing 
D) under applied overhead 
E) over applied overhead
F)finished goods ledger
G)materials ledger 
A) job order cost system 
B) process cost system 
C) activity-based costing 
D) under applied overhead 
E) over applied overhead
F)finished goods ledger
G)materials ledger

Question 6

Which of the following would record the labor costs to an individual job?

Accepted Answer

A)  clock cards 
B)  in-and-out cards 
C)  time tickets 
D)  a payroll register 
A)  clock cards 
B)  in-and-out cards 
C)  time tickets 
D)  a payroll register

Question 7

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:   Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of $500 on each job.
-What is the ending balance of Finished Goods for Adams Company at the end of the first quarter?

Accepted Answer

A)  $456 
B)  $1,067 
C)  $1,685 
D)  $2,752 
A)  $456 
B)  $1,067 
C)  $1,685 
D)  $2,752

Question 8

The entry to record the flow of direct labor costs into production in a job order cost accounting system is

Accepted Answer

A)  debit Factory Overhead, credit Work in Process 
B)  debit Finished Goods, credit Wages Payable 
C)  debit Work in Process, credit Wages Payable 
D)  debit Factory Overhead, credit Wages Payable 
A)  debit Factory Overhead, credit Work in Process 
B)  debit Finished Goods, credit Wages Payable 
C)  debit Work in Process, credit Wages Payable 
D)  debit Factory Overhead, credit Wages Payable

Question 9

Match each of the following phrases with the term a-g) that it most closely describes.
-typically used by companies whose products are indistinguishable from each other

Accepted Answer

A) job order cost system 
B) process cost system 
C) activity-based costing 
D) under applied overhead 
E) over applied overhead
F)finished goods ledger
G)materials ledger 
A) job order cost system 
B) process cost system 
C) activity-based costing 
D) under applied overhead 
E) over applied overhead
F)finished goods ledger
G)materials ledger

Question 10

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

Accepted Answer

A)  $180,000 
B)  $181,000 
C)  $172,500 
D)  $184,000 
A)  $180,000 
B)  $181,000 
C)  $172,500 
D)  $184,000

Question 11

Which of the following would be most likely to use process costing?

Accepted Answer

A)  a custom furniture manufacturer 
B)  an auto body repair shop 
C)  a law firm 
D)  a lawn fertilizer manufacturer 
A)  a custom furniture manufacturer 
B)  an auto body repair shop 
C)  a law firm 
D)  a lawn fertilizer manufacturer

Question 12

Cost accounting systems measure, record, and report product costs.

Accepted Answer

A) True 
 B)False

Question 13

The 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 was 54,300 hours. The actual factory overhead for the year was $1,375,000.
a) Determine the total factory overhead amount applied.
b) Calculate the over- or under applied amount for the year.
c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold.

Accepted Answer

a) $1,250,000/50,000 = $25
54,

Question 14

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?

Accepted Answer

A)  materials 
B)  direct labor 
C)  rent 
D)  supplies 
A)  materials 
B)  direct labor 
C)  rent 
D)  supplies

Question 15

As product costs are incurred in the manufacturing process, they are accounted for as assets and reported on the balance sheet as inventory.

Accepted Answer

A) True 
 B)False

Question 16

Match each of the following phrases with the term a-e) that it most closely describes it. Each term will be used only once.
-these make up the work in process subsidiary ledger

Accepted Answer

A) job cost sheets 
B) materials requisitions 
C) receiving report 
D) time tickets 
E) cost allocation 
A) job cost sheets 
B) materials requisitions 
C) receiving report 
D) time tickets 
E) cost allocation

Question 17

The 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 was 4,780. If the actual factory overhead totaled $141,800, determine the over- or under applied amount for the month.

Accepted Answer

$1,250,000/40,000 = $31.25
$31

Question 18

The 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.

Accepted Answer

@#IMG-DLM& *560 × $2

Question 19

Materials purchased on account during the month amounted to $190,000. Materials requisitioned and placed in production totaled $156,000. The entry to record the transaction for materials requisitioned by the production department is

Accepted Answer

A)  Materials Work in Process
156,000
156,000 
B)  Work in Process Materials 190,000
190,000 
C)  Work in Process Materials 156,000
156,000 
D)  Work in Process Cash
156,000
156,000 
A)  Materials Work in Process
156,000
156,000 
B)  Work in Process Materials 190,000
190,000 
C)  Work in Process Materials 156,000
156,000 
D)  Work in Process Cash
156,000
156,000

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 17: Job Order Costing

The job order costing system is used by service firms to determine revenues, expenses, and ultimately profit.

For which of the following businesses would the process cost system be appropriate?

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. In addition, factory overhead charged to production was $32,000. The entry to record the direct labor costs is

Match each of the following phrases with the term a-g) that it most closely describes. -applied overhead is more than actual overhead incurred

Which of the following would record the labor costs to an individual job?

The entry to record the flow of direct labor costs into production in a job order cost accounting system is

Match each of the following phrases with the term a-g) that it most closely describes. -typically used by companies whose products are indistinguishable from each other

Which of the following would be most likely to use process costing?

Cost accounting systems measure, record, and report product costs.

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?

As product costs are incurred in the manufacturing process, they are accounted for as assets and reported on the balance sheet as inventory.

Match each of the following phrases with the term a-e) that it most closely describes it. Each term will be used only once. -these make up the work in process subsidiary ledger

The 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.

Materials purchased on account during the month amounted to $190,000. Materials requisitioned and placed in production totaled $156,000. The entry to record the transaction for materials requisitioned by the production department is

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

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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