Question 1

Overapplied or underapplied overhead should be removed from the Factory Overhead account at the end of each accounting period.

Accepted Answer

A) True 
 B)False

Question 2

A job order production system would be appropriate for a company that produces which one of the following items?

Accepted Answer

A) A landscaping design for a new hospital. 
B) Seedlings for sale in a nursery. 
C) Sacks of yard fertilizer. 
D) Packets of flower seeds. 
E) Small gardening tools, including rakes, shovels, and hoes. 
A) A landscaping design for a new hospital. 
B) Seedlings for sale in a nursery. 
C) Sacks of yard fertilizer. 
D) Packets of flower seeds. 
E) Small gardening tools, including rakes, shovels, and hoes.

Question 3

A type of production that yields customized products or services for each customer is called:

Accepted Answer

A) Customer orientation production. 
B) Job order production. 
C) Just-in-time production. 
D) Job lot production. 
E) Process production. 
A) Customer orientation production. 
B) Job order production. 
C) Just-in-time production. 
D) Job lot production. 
E) Process production.

Question 4

Under a job order cost accounting system,individual jobs are always charged with actual overhead costs when they are transferred to finished goods.

Accepted Answer

A) True 
 B)False

Question 5

A company that uses a job order cost accounting system would make the following entry to record the flow of direct materials into production:

Accepted Answer

A) debit Goods in Process Inventory, credit Cost of Goods Sold. 
B) debit Goods in Process Inventory, credit Raw Materials Inventory. 
C) debit Goods in Process Inventory, credit Factory Overhead. 
D) debit Factory Overhead, credit Raw Materials Inventory. 
E) debit Finished Goods Inventory, credit Raw Materials Inventory. 
A) debit Goods in Process Inventory, credit Cost of Goods Sold. 
B) debit Goods in Process Inventory, credit Raw Materials Inventory. 
C) debit Goods in Process Inventory, credit Factory Overhead. 
D) debit Factory Overhead, credit Raw Materials Inventory. 
E) debit Finished Goods Inventory, credit Raw Materials Inventory.

Question 6

Service firms,unlike manufacturing firms,should only use actual costs when determining a selling price for their services.

Accepted Answer

A) True 
 B)False

Question 7

What is a cost accounting system?
 What are the two basic types of cost accounting systems?

Accepted Answer

A cost accounting system is an accountin

Question 8

A system of accounting for production operations that uses a periodic inventory system is called a:

Accepted Answer

A) Manufacturing accounting system. 
B) Production accounting system. 
C) General accounting system. 
D) Cost accounting system. 
E) Finished goods accounting system. 
A) Manufacturing accounting system. 
B) Production accounting system. 
C) General accounting system. 
D) Cost accounting system. 
E) Finished goods accounting system.

Question 9

The production activities for a customized product represent a(n):

Accepted Answer

A) Operation. 
B) Job. 
C) Unit. 
D) Pool. 
E) Process. 
A) Operation. 
B) Job. 
C) Unit. 
D) Pool. 
E) Process.

Question 10

Job order costing is applicable to manufacturing firms only and not service firms.

Accepted Answer

A) True 
 B)False

Question 11

Cost accounting systems used by manufacturing companies are based on the:

Accepted Answer

A) Periodic inventory system. 
B) Perpetual inventory system. 
C) Finished goods inventories. 
D) Weighted average inventories. 
E) LIFO inventory system. 
A) Periodic inventory system. 
B) Perpetual inventory system. 
C) Finished goods inventories. 
D) Weighted average inventories. 
E) LIFO inventory system.

Question 12

A __________ is calculated by relating total estimated factory overhead to an allocation factor such as total estimated direct labor cost,and is used to allocate factory overhead to specific jobs.

Accepted Answer

predetermined overhe

Question 13

A job order cost accounting system would be appropriate for a manufacturer of automobile tires.

Accepted Answer

A) True 
 B)False

Question 14

At the current year-end,Hardly Company found that its overhead was underapplied by $2,500,and this amount was not deemed to be a material amount.Based on this information,Hardly should

Accepted Answer

A) Close the $2,500 to Cost of Goods Sold. 
B) Close the $2,500 to Finished Goods Inventory. 
C) Do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year. 
D) Carry the $2,500 to the income statement as "Other Expense" 
E) Carry the $2,500 to the next period. 
A) Close the $2,500 to Cost of Goods Sold. 
B) Close the $2,500 to Finished Goods Inventory. 
C) Do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year. 
D) Carry the $2,500 to the income statement as "Other Expense" 
E) Carry the $2,500 to the next period.

Question 15

Predetermined overhead rates are necessary because cost accountants use periodic inventory systems.

Accepted Answer

A) True 
 B)False

Question 16

Finished goods inventory is $190,000.If overhead applied to these goods is $72,000,and the overhead rate is 120% of direct labor,how much direct materials cost was incurred in producing the inventory?

Accepted Answer

A) $31,600. 
B) $58,000. 
C) $56,000. 
D) $60,000. 
E) $86,400. 
A) $31,600. 
B) $58,000. 
C) $56,000. 
D) $60,000. 
E) $86,400.

Question 17

If a company applies overhead to production with a predetermined rate,a credit balance in the Factory Overhead account at the end of the period means that:

Accepted Answer

A) The bookkeeper has made an error because the debits don't equal the credits. 
B) The balance will be carried forward to the next period as an overhead cost. 
C) Actual overhead incurred was less than the overhead amount charged to production. 
D) The overhead was underapplied for the period. 
E) Actual overhead was greater than the overhead amount charged to production. 
A) The bookkeeper has made an error because the debits don't equal the credits. 
B) The balance will be carried forward to the next period as an overhead cost. 
C) Actual overhead incurred was less than the overhead amount charged to production. 
D) The overhead was underapplied for the period. 
E) Actual overhead was greater than the overhead amount charged to production.

Question 18

Hancock Manufacturing allocates overhead to production on the basis of direct labor costs.At the beginning of the year,Hancock estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000.During the year Hancock incurred $418,000 in materials costs,$413,200 in overhead costs and $224,000 in direct labor costs.Compute the overhead application rate.

Accepted Answer

A) 180%. 
B) 55.6%. 
C) 186%. 
D) 184%. 
E) 96.6%. 
A) 180%. 
B) 55.6%. 
C) 186%. 
D) 184%. 
E) 96.6%.

Question 19

Job order production systems would be appropriate for companies that produce training films for a specific customer or custom-made furniture to be used in a new five-star resort hotel.

Accepted Answer

A) True 
 B)False

Question 20

Estimated overhead and direct labor costs for the year were $112,500 and $125,000,respectively.During the year,actual overhead was $107,400 and actual direct labor cost was $120,000.The entry to close the over- or underapplied overhead at year-end,assuming an immaterial amount,would include:

Accepted Answer

A) A debit to Cost of Goods Sold for $600. 
B) A credit to Factory Overhead for $600. 
C) A credit to Finished Goods Inventory for $600. 
D) A debit to Goods in Process Inventory for $600. 
E) A credit to Cost of Goods Sold for $600. 
A) A debit to Cost of Goods Sold for $600. 
B) A credit to Factory Overhead for $600. 
C) A credit to Finished Goods Inventory for $600. 
D) A debit to Goods in Process Inventory for $600. 
E) A credit to Cost of Goods Sold for $600.

Exam 19: Job Order Costing

Overapplied or underapplied overhead should be removed from the Factory Overhead account at the end of each accounting period.

A job order production system would be appropriate for a company that produces which one of the following items?

A type of production that yields customized products or services for each customer is called:

Under a job order cost accounting system,individual jobs are always charged with actual overhead costs when they are transferred to finished goods.

A company that uses a job order cost accounting system would make the following entry to record the flow of direct materials into production:

Service firms,unlike manufacturing firms,should only use actual costs when determining a selling price for their services.

What is a cost accounting system? What are the two basic types of cost accounting systems?

A system of accounting for production operations that uses a periodic inventory system is called a:

The production activities for a customized product represent a(n):

Job order costing is applicable to manufacturing firms only and not service firms.

Cost accounting systems used by manufacturing companies are based on the:

A __________ is calculated by relating total estimated factory overhead to an allocation factor such as total estimated direct labor cost,and is used to allocate factory overhead to specific jobs.

A job order cost accounting system would be appropriate for a manufacturer of automobile tires.

At the current year-end,Hardly Company found that its overhead was underapplied by $2,500,and this amount was not deemed to be a material amount.Based on this information,Hardly should

Predetermined overhead rates are necessary because cost accountants use periodic inventory systems.

Finished goods inventory is $190,000.If overhead applied to these goods is $72,000,and the overhead rate is 120% of direct labor,how much direct materials cost was incurred in producing the inventory?

If a company applies overhead to production with a predetermined rate,a credit balance in the Factory Overhead account at the end of the period means that:

Job order production systems would be appropriate for companies that produce training films for a specific customer or custom-made furniture to be used in a new five-star resort hotel.

Estimated overhead and direct labor costs for the year were $112,500 and $125,000,respectively.During the year,actual overhead was $107,400 and actual direct labor cost was $120,000.The entry to close the over- or underapplied overhead at year-end,assuming an immaterial amount,would include:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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