Question 1

Underapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the actual overhead incurred during a period.

Accepted Answer

A) True 
 B)False

Question 2

A company's job order costing system applies overhead based on direct labor cost. The company's estimated production costs for were: direct labor, $57,600; direct materials, $76,800; and factory overhead, $9,600. Calculate the company's overhead rate.

Accepted Answer

$9,600/$5

Question 3

The journal entry to record the usage of Direct Materials includes a debit to Work in Process Inventory.

Accepted Answer

A) True 
 B)False

Question 4

The two basic types of cost accounting systems are:

Accepted Answer

A)  Job order costing and customized service costing. 
B)  Job order costing and perpetual costing. 
C)  Job order costing and periodic costing. 
D)  Job order costing and customized product costing. 
E)  Job order costing and process costing. 
A)  Job order costing and customized service costing. 
B)  Job order costing and perpetual costing. 
C)  Job order costing and periodic costing. 
D)  Job order costing and customized product costing. 
E)  Job order costing and process costing.

Question 5

A system of accounting for production operations that produces timely information about inventories and manufacturing costs per unit of product is a:

Accepted Answer

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

Question 6

A company's file of job cost sheets for jobs that are not yet completed equals the balance in the Work in Process Inventory account.

Accepted Answer

A) True 
 B)False

Question 7

Both direct and indirect labor costs are recorded on the individual job cost sheets.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost.
- The journal entry to record the factory payroll is:

Accepted Answer

A)  Debit Work in Process Inventory $150,000; credit Cash $150,000. 
B)  Debit Work in Process Inventory $150,000; debit Factory Overhead $40,000; credit Factory Wages Payable $190,000. 
C)  Debit Work in Process Inventory $110,000; credit Factory Overhead $40,000; credit Factory Wages Payable $150,000. 
D)  Debit Work in Process Inventory $110,000; debit Factory Overhead $40,000; credit Factory Wages Payable $150,000. 
E)  Debit Work in Process Inventory $150,000; credit Factory Overhead $40,000; credit Factory Wages Payable $110,000. 
A)  Debit Work in Process Inventory $150,000; credit Cash $150,000. 
B)  Debit Work in Process Inventory $150,000; debit Factory Overhead $40,000; credit Factory Wages Payable $190,000. 
C)  Debit Work in Process Inventory $110,000; credit Factory Overhead $40,000; credit Factory Wages Payable $150,000. 
D)  Debit Work in Process Inventory $110,000; debit Factory Overhead $40,000; credit Factory Wages Payable $150,000. 
E)  Debit Work in Process Inventory $150,000; credit Factory Overhead $40,000; credit Factory Wages Payable $110,000.

Question 10

An example of direct labor cost is:

Accepted Answer

A)  Accountant salary 
B)  Janitor wages 
C)  Maintenance worker wages 
D)  Supervisor salary 
E)  Product assembler wages 
A)  Accountant salary 
B)  Janitor wages 
C)  Maintenance worker wages 
D)  Supervisor salary 
E)  Product assembler wages

Question 11

A company's file of job cost sheets for jobs that are completed but not yet sold equals the balance in the Finished Goods Inventory account.

Accepted Answer

A) True 
 B)False

Question 12

A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Work in Process Inventory.

Accepted Answer

A) True 
 B)False

Question 13

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams 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)  96.6%. 
B)  184%. 
C)  186%. 
D)  55.6%. 
E)  180%. 
A)  96.6%. 
B)  184%. 
C)  186%. 
D)  55.6%. 
E)  180%.

Question 14

When Factory Wages Payable costs for labor are allocated in a job cost accounting system:

Accepted Answer

A)  Cost of Goods Manufactured is debited and Direct Labor is credited. 
B)  Factory Wages Payable is debited and Work in Process Inventory is credited. 
C)  Work in Process Inventory is debited and Factory Overhead is credited. 
D)  Work in Process Inventory and Factory Overhead are debited and Factory Wages Payable is credited. 
E)  Direct Labor and Indirect Labor are debited and Factory Wages Payable is credited. 
A)  Cost of Goods Manufactured is debited and Direct Labor is credited. 
B)  Factory Wages Payable is debited and Work in Process Inventory is credited. 
C)  Work in Process Inventory is debited and Factory Overhead is credited. 
D)  Work in Process Inventory and Factory Overhead are debited and Factory Wages Payable is credited. 
E)  Direct Labor and Indirect Labor are debited and Factory Wages Payable is credited.

Question 15

Features of a job costing system include all but which of the following:

Accepted Answer

A)  Separate manufacturing from other products. 
B)  Customization. 
C)  Mass production. 
D)  Diversity of products produced. 
E)  Heterogeneity. 
A)  Separate manufacturing from other products. 
B)  Customization. 
C)  Mass production. 
D)  Diversity of products produced. 
E)  Heterogeneity.

Question 16

A job cost sheet shows information about each of the following items except:

Accepted Answer

A)  The name of the customer. 
B)  The costs incurred by the marketing department in selling the job. 
C)  The overhead costs assigned to the job. 
D)  The direct materials costs assigned to the job. 
E)  The direct labor costs assigned to the job. 
A)  The name of the customer. 
B)  The costs incurred by the marketing department in selling the job. 
C)  The overhead costs assigned to the job. 
D)  The direct materials costs assigned to the job. 
E)  The direct labor costs assigned to the job.

Question 17

Material amounts of under- or overapplied factory overhead are always closed entirely to Cost of Goods Sold at the end of an accounting period.

Accepted Answer

A) True 
 B)False

Question 18

When actual overhead cost exceeds the overhead applied, overhead is said to be underapplied.

Accepted Answer

A) True 
 B)False

Question 19

Using the following accounts and an overhead rate of 130% of direct labor cost, compute the amount of applied overhead.

Accepted Answer

A)  $90,500. 
B)  $78,000. 
C)  $60,000. 
D)  $71,890. 
E)  $138,000. 
A)  $90,500. 
B)  $78,000. 
C)  $60,000. 
D)  $71,890. 
E)  $138,000.

Question 20

The journal entry to record the usage of Indirect Materials includes a debit to Work in Process Inventory.

Accepted Answer

A) True 
 B)False

Exam 19: Job Order Costing

Underapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the actual overhead incurred during a period.

A company's job order costing system applies overhead based on direct labor cost. The company's estimated production costs for were: direct labor, $57,600; direct materials, $76,800; and factory overhead, $9,600. Calculate the company's overhead rate.

The journal entry to record the usage of Direct Materials includes a debit to Work in Process Inventory.

The two basic types of cost accounting systems are:

A system of accounting for production operations that produces timely information about inventories and manufacturing costs per unit of product is a:

A company's file of job cost sheets for jobs that are not yet completed equals the balance in the Work in Process Inventory account.

Both direct and indirect labor costs are recorded on the individual job cost sheets.

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

An example of direct labor cost is:

A company's file of job cost sheets for jobs that are completed but not yet sold equals the balance in the Finished Goods Inventory account.

A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Work in Process Inventory.

When Factory Wages Payable costs for labor are allocated in a job cost accounting system:

Features of a job costing system include all but which of the following:

A job cost sheet shows information about each of the following items except:

Material amounts of under- or overapplied factory overhead are always closed entirely to Cost of Goods Sold at the end of an accounting period.

When actual overhead cost exceeds the overhead applied, overhead is said to be underapplied.

Using the following accounts and an overhead rate of 130% of direct labor cost, compute the amount of applied overhead.

The journal entry to record the usage of Indirect Materials includes a debit to Work in Process Inventory.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

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

Present and Future Values in Accounting

Activity-Based Costing

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