Question 1

A cost driver is an activity base that is highly correlated with manufacturing overhead costs.

Accepted Answer

A) True 
 B)False

Question 2

The journal entry which accounts for the $300,000 transferred out of Work in Process account includes a debit of $300,000 to:

Accepted Answer

A)  Finished Goods. 
B)  Cost of Goods Sold. 
C)  Accounts Receivable. 
D)  Sales. 
A)  Finished Goods. 
B)  Cost of Goods Sold. 
C)  Accounts Receivable. 
D)  Sales.

Question 3

The account Work-in-Process Inventory:

Accepted Answer

A)  Consists of completed goods that have not yet been sold. 
B)  Consists of goods being manufactured that are incomplete. 
C)  Consists of materials to be used in the production process. 
D)  Consists of the cost of new materials used, labor but not overhead. 
A)  Consists of completed goods that have not yet been sold. 
B)  Consists of goods being manufactured that are incomplete. 
C)  Consists of materials to be used in the production process. 
D)  Consists of the cost of new materials used, labor but not overhead.

Question 4

In a job order cost system, the sum of debits to the Work in Process controlling account during a particular period is equal to each of the following except:

Accepted Answer

A)  The total of debits to the Materials Inventory, Direct Labor, and Manufacturing Overhead accounts during the period. 
B)  The total of direct materials, direct labor, and manufacturing overhead costs applied to jobs during the period. 
C)  The total of amounts entered on job cost sheets during the period. 
D)  The total of credits to the Materials Inventory, Direct Labor, and Manufacturing Overhead accounts during the period. 
A)  The total of debits to the Materials Inventory, Direct Labor, and Manufacturing Overhead accounts during the period. 
B)  The total of direct materials, direct labor, and manufacturing overhead costs applied to jobs during the period. 
C)  The total of amounts entered on job cost sheets during the period. 
D)  The total of credits to the Materials Inventory, Direct Labor, and Manufacturing Overhead accounts during the period.

Question 5

Which of the following costing systems would always use job cost sheets?

Accepted Answer

A)  Job order costing. 
B)  Process costing. 
C)  Activity-based costing. 
D)  All three systems. 
A)  Job order costing. 
B)  Process costing. 
C)  Activity-based costing. 
D)  All three systems.

Question 6

Refer to the above data. If Riverview applies overhead using a predetermined rate based on labor-hours, what amount of overhead will be assigned to a unit of output which requires 0.5 machine hours and 0.25 labor hours to complete?

Accepted Answer

A)  $16.00. 
B)  $30.00. 
C)  $20.00. 
D)  Some other amount. 
A)  $16.00. 
B)  $30.00. 
C)  $20.00. 
D)  Some other amount.

Question 7

The employee time card for John Winter indicates that he spent last week performing routine maintenance on factory machinery. Payments made to Winter for last week's work should be:

Accepted Answer

A)  Debited to Work in Process Inventory. 
B)  Credited to the Direct Labor account. 
C)  Debited to the Direct Labor account. 
D)  Debited to the Manufacturing Overhead account. 
A)  Debited to Work in Process Inventory. 
B)  Credited to the Direct Labor account. 
C)  Debited to the Direct Labor account. 
D)  Debited to the Manufacturing Overhead account.

Question 8

Which of the following is not a commonly used cost accounting system?

Accepted Answer

A)  Manufacturing yield costing. 
B)  Job order costing. 
C)  Process costing. 
D)  Activity-based costing. 
A)  Manufacturing yield costing. 
B)  Job order costing. 
C)  Process costing. 
D)  Activity-based costing.

Question 9

Application of overhead - missing information
Holden Corporation manufactures a single product. Overhead is applied to production during the year using a predetermined rate based on direct labor cost. During the month of April, 50,000 units of output were produced at a total direct labor cost of $425,000. The amount of overhead applied to these units was $2,125,000. Assuming total direct labor cost for the year had been estimated to be $4,125,000, calculate the amount of manufacturing overhead Holden Corporation had estimated it would incur during the year.
What is estimated total manufacturing overhead cost for the year?

Accepted Answer

Estimated total manu

Question 10

What are the total manufacturing overhead costs allocated to the Car Seats for the current month?

Accepted Answer

A)  $69,837. 
B)  $102,873. 
C)  $37,290. 
D)  $210,000. 
A)  $69,837. 
B)  $102,873. 
C)  $37,290. 
D)  $210,000.

Question 11

What are the factory utilities costs allocated to Baby Swings during the current month?

Accepted Answer

A)  $210,000. 
B)  $51,808. 
C)  $34,016. 
D)  $19,177. 
A)  $210,000. 
B)  $51,808. 
C)  $34,016. 
D)  $19,177.

Question 12

118.Using ABC to allocate manufacturing overhead can help managers to:

Accepted Answer

A)  Identify what activities drive overhead costs. 
B)  Set product prices. 
C)  Locate inefficiencies in the production process. 
D)  Do all of the above. 
A)  Identify what activities drive overhead costs. 
B)  Set product prices. 
C)  Locate inefficiencies in the production process. 
D)  Do all of the above.

Question 13

Overhead application rate
Define the term cost driver and explain the role of this item in the computation of an overhead application rate.

Accepted Answer

A cost driver is a measurement that is a

Question 14

The cost of salaries paid to employees who work in a factory maintaining the heating system is considered:

Accepted Answer

A)  Direct labor. 
B)  Indirect materials. 
C)  Factory overhead. 
D)  General and administrative costs. 
A)  Direct labor. 
B)  Indirect materials. 
C)  Factory overhead. 
D)  General and administrative costs.

Question 15

Marty's Metal Shop uses a job order cost system. It applies overhead to jobs at a rate of 175% of direct labor costs. Job No. 2617 required $800 in direct labor costs. The job was initially budgeted to require $850 in direct labor costs. Overhead applied to Job No. 2617 during the period amounted to:

Accepted Answer

A)  $850. 
B)  $1,400. 
C)  $1,275. 
D)  Some other amount. 
A)  $850. 
B)  $1,400. 
C)  $1,275. 
D)  Some other amount.

Question 16

A collection of job cost sheets would be similar to a subsidiary ledger and the work-in-process account would be similar to the controlling account.

Accepted Answer

A) True 
 B)False

Question 17

Job order cost system-journal entries
Paxton Products, which uses a job order cost system, completed the following transactions during the current month:
(A) Materials costing $75,000 were used on various jobs.
(B) Time cards of direct workers indicate direct labor costs of $125,000 for the month.
(C) Overhead is applied to jobs at a rate of 75% of direct labor cost.
(D) Jobs with total accumulated costs of $165,000 were finished during the month.
(E) Units costing $210,000 were sold during the month at sales prices totaling $390,000. All sales were on account.
In the space provided, prepare a general journal entry for the month summarizing each of the above categories of transactions. Explanations may be omitted.

Accepted Answer

The answer of Job order cost system-journal entries
Paxton Products, which...

Question 18

Doyle Co. uses a job order cost accounting system. At year-end the Work-in-Process Inventory controlling account showed a debit balance of $43,125. For the two jobs in process at year-end, one showed $6,000 in direct materials and $4,500 in direct labor. The job cost sheet for the second job showed $9,000 in direct materials and $6,750 in direct labor. If the company is using a predetermined overhead application rate based on direct labor cost, the rate is:

Accepted Answer

A)  50%. 
B)  100%. 
C)  150%. 
D)  200%. 
A)  50%. 
B)  100%. 
C)  150%. 
D)  200%.

Question 19

Activity-based costing uses multiple activity bases to assign overhead costs to units of production.

Accepted Answer

A) True 
 B)False

Question 20

Moran Company uses a job order cost system and has established a predetermined overhead application rate for the current year of 150% of direct labor cost, based on budgeted overhead of $900,000 and budgeted direct labor cost of $600,000. Job no. 1 was charged with direct materials of $36,000 and with overhead of $27,000. What is the total cost of job no. 1?

Accepted Answer

A)  $64,000. 
B)  $81,000. 
C)  $91,000. 
D)  Cannot be determined without additional information. 
A)  $64,000. 
B)  $81,000. 
C)  $91,000. 
D)  Cannot be determined without additional information.

Exam 17: Job Order Cost Systems and Overhead Allocations

A cost driver is an activity base that is highly correlated with manufacturing overhead costs.

The journal entry which accounts for the $300,000 transferred out of Work in Process account includes a debit of $300,000 to:

The account Work-in-Process Inventory:

In a job order cost system, the sum of debits to the Work in Process controlling account during a particular period is equal to each of the following except:

Which of the following costing systems would always use job cost sheets?

Refer to the above data. If Riverview applies overhead using a predetermined rate based on labor-hours, what amount of overhead will be assigned to a unit of output which requires 0.5 machine hours and 0.25 labor hours to complete?

The employee time card for John Winter indicates that he spent last week performing routine maintenance on factory machinery. Payments made to Winter for last week's work should be:

Which of the following is not a commonly used cost accounting system?

What are the total manufacturing overhead costs allocated to the Car Seats for the current month?

What are the factory utilities costs allocated to Baby Swings during the current month?

118.Using ABC to allocate manufacturing overhead can help managers to:

Overhead application rate Define the term cost driver and explain the role of this item in the computation of an overhead application rate.

The cost of salaries paid to employees who work in a factory maintaining the heating system is considered:

A collection of job cost sheets would be similar to a subsidiary ledger and the work-in-process account would be similar to the controlling account.

Activity-based costing uses multiple activity bases to assign overhead costs to units of production.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

Filters