Question 1

A company that makes which of the following types of products would best be suited for a job costing system?

Accepted Answer

A)  Fruit juice 
B)  Bathing suits 
C)  Snack chips 
D)  Compact discs 
E)  Custom jewelry

Question 2

The collection of job cost sheets for all jobs in process makes up the subsidiary ledger controlled by the ________ Inventory.

Accepted Answer

The answer of The collection of job cost sheets for...

Question 3

A company that uses a job order costing system incurred $10,000 of factory payroll during May. Present the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.

Accepted Answer

The answer of A company that uses a job order...

Question 4

Taylor Corp. uses a job order costing system and worked only on Job 101 during the current period. Job 101 was sold for $460,000. The following information pertains to costs incurred for Job 101.
 $$\begin{array} { |l | l |} 
\hline\text { Direct Materials } & \$ 90,000 \
\hline \text { Indirect Materials } & \$ 30,000 \
\hline \text { Direct Labor } & \$ 130,000 \
\hline \text { Indirect Labor } & \$ 75,000 \
\hline \text { Depreciation of Machinery } & \$ 10,000 \
\hline \text { Factory Supplies } & \$ 8,000 \
\hline \text { Overhead Application Rate } & 90 \% \text { of direct labor } \
\hline
\end{array}$$ After adjusting for the amount of over or underapplied overhead, determine the amount of gross profit earned on Job 101.

Accepted Answer

The answer of Taylor Corp. uses a job order costing...

Question 5

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 6

Drop Anchor takes special orders to manufacture sail boats for high end customers. Complete the job cost sheets for Drop Anchor for September based on the following information. Prepare journal entries to record the transactions as well as post to the job cost sheets.
a. Purchased raw materials on credit, $145,000.
b. Materials requisitions: Job 240, $48,000; Job 241, $36,000; Job 242, $42,000; indirect materials were $12,000.
c. Time tickets used to charge labor to jobs: Job 240, $40,000; Job 241, $30,000; Job 242, $35,000, indirect labor is $25,000.
d. The company incurred the following additional overhead costs: depreciation of factory building, $70,000; depreciation of factory equipment, $60,000; expired factory insurance, $10,000; utilities and maintenance cost of $20,000 were paid in cash.
e. Applied overhead to all three jobs. The predetermined overhead rate is 190% of direct labor cost.
f. Transferred jobs 240 and 242 to Finished Goods Inventory.
g. Sold job 240 for $300,000 for cash.
h. Closed the under- or over-applied overhead account balance.

Accepted Answer

The answer of Drop Anchor takes special orders to manufacture...

Question 7

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 8

The production of one unit of Product BJM used $27.50 of direct materials and $21.00 of direct labor. The unit sold for $76.00 and was assigned overhead at a rate of 30% of labor costs. What is the gross profit per unit on its sale?

Accepted Answer

The answer of The production of one unit of Product...

Question 9

Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. What amount will Andrew debit to Work in Process Inventory for the month of March?

Accepted Answer

A)  $165,000 
B)  $154,000 
C)  $13,000 
D)  $141,000 
E)  $33,000

Question 10

The journal entry to record the purchase of materials includes a debit to Work in Process Inventory.

Accepted Answer

A) True 
 B)False

Question 11

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.

Question 12

The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as:

Accepted Answer

A)  Adjusted overhead. 
B)  Estimated overhead. 
C)  Predetermined overhead. 
D)  Underapplied overhead. 
E)  Overapplied overhead.

Question 13

In nearly all job order cost systems, materials ledger cards are perpetual records that are updated each time materials are purchased or issued for use in production.

Accepted Answer

A) True 
 B)False

Question 14

Actual factory overhead incurred in a job costing system is debited to a Factory Overhead general ledger account and credited to various other accounts.

Accepted Answer

A) True 
 B)False

Question 15

Factory overhead is often collected and summarized in a subsidiary factory overhead ledger.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

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

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $167,800 during the month, compute the amount of under- or overapplied overhead:

Accepted Answer

A)  $2,800 overapplied. 
B)  $17,800 underapplied. 
C)  $2,800 underapplied. 
D)  $17,800 overapplied. 
E)  $57,200 overapplied.

Question 19

The amount by which overhead incurred during a period exceeds the overhead applied to jobs is:

Accepted Answer

A)  Balanced overhead. 
B)  Predetermined overhead. 
C)  Actual overhead. 
D)  Underapplied overhead. 
E)  Overapplied overhead.

Question 20

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

Exam 2: Job Order Costing and Analysis

A company that makes which of the following types of products would best be suited for a job costing system?

The collection of job cost sheets for all jobs in process makes up the subsidiary ledger controlled by the ________ Inventory.

A company that uses a job order costing system incurred $10,000 of factory payroll during May. Present the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.

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.

The production of one unit of Product BJM used $27.50 of direct materials and $21.00 of direct labor. The unit sold for $76.00 and was assigned overhead at a rate of 30% of labor costs. What is the gross profit per unit on its sale?

The journal entry to record the purchase of materials includes a debit to Work in Process Inventory.

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

The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as:

In nearly all job order cost systems, materials ledger cards are perpetual records that are updated each time materials are purchased or issued for use in production.

Actual factory overhead incurred in a job costing system is debited to a Factory Overhead general ledger account and credited to various other accounts.

Factory overhead is often collected and summarized in a subsidiary factory overhead ledger.

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

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

The amount by which overhead incurred during a period exceeds the overhead applied to jobs is: