Question 1

If a company multiplies its predetermined overhead rate by the actual activity level of its allocation base,it is using:

Accepted Answer

A) standard costing. 
B) normal costing. 
C) actual costing. 
D) budget costing.

Question 2

One difference between jobs and projects is the account titles used in the costing process.The main difference is the length of time to complete the work.

Accepted Answer

A) True 
 B)False

Question 3

The following selected data were taken from the books of the Bixby Box Company.The company uses job costing to account for manufacturing costs.The data relate to June operations.A)Materials and supplies were requisitioned from the stores clerk as follows: Job 405,material X,$7,000.Job 406,material X,$3,000;material Y,$6,000.Job 407,material X,$7,000;material Y,$3,200.For general factory use: materials A,B,and C,$2,300.B)Time tickets for the month were chargeable as follows:  C)Other information:
Factory paychecks for $36,700 were issued during the month.Various factory overhead charges of $19,400 were incurred on account.Depreciation of factory equipment for the month was $5,400.Factory overhead was applied to jobs at the rate of $3.50 per direct labor hour.Job orders completed during the month: Job 405 and Job 406.Selling and administrative costs were $2,100.Factory overhead is closed out only at the end of the year.The end of the month Work-in-Process Inventory balance would be:

Accepted Answer

A) $18,200. 
B) $24,850. 
C) $64,100. 
D) $88,950.

Question 4

Complex jobs that take multiple time periods and require the work of many different departments,divisions,or subcontractors are called:

Accepted Answer

A) clients. 
B) projects. 
C) customers. 
D) contracts.

Question 5

The financial records for the Lee Manufacturing Company have been destroyed in a fire.The following information has been obtained from a separate set of books maintained by the cost accountant.The cost accountant now asks for your assistance in computing the missing amounts.  What is the value of the beginning Finished Goods Inventory?

Accepted Answer

A) $0. 
B) $4,200. 
C) $13,300. 
D) $21,700.

Question 6

In a traditional job order costing system,the issue of indirect materials to a production department increases: (CPA adapted)

Accepted Answer

A) stores control. 
B) work-in-Process control. 
C) factory overhead control. 
D) factory overhead applieD.Indirect material is overhead-it increases Manufacturing Overhead Control.

Question 7

Which of the following companies would most likely use job costing?

Accepted Answer

A) Paper manufacturer. 
B) Paint producer. 
C) Breakfast cereal maker. 
D) Advertising agency.

Question 8

Accounting for direct materials and direct labor is easier than accounting for manufacturing overhead costs.This is because direct costs are traceable to jobs while overhead is allocated.

Accepted Answer

A) True 
 B)False

Question 9

The following events took place at a manufacturing company for the current year: (1)Purchased $95,000 in direct materials.(2)Incurred labor costs as follows: (a)direct,$56,000 and (b)indirect,$13,600.(3)Other manufacturing overhead was $107,000,excluding indirect labor.(4)Transferred 80% of the materials to the manufacturing assembly line.(5)Completed 65% of the Work-in-Process during the year.(6)Sold 85% of the completed goods.(7)There were no beginning inventories.What is the value of the ending Work-in-Process Inventory?

Accepted Answer

A) $13,261.50. 
B) $14,259.00. 
C) $88,410.00. 
D) $95,060.50.

Question 10

Underapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.An underapplied overhead situation occurs when the actual overhead incurred exceeds the applied overhead.

Accepted Answer

A) True 
 B)False

Question 11

Scottso Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much is the Over- or underapplied overhead?

Accepted Answer

A) $21,520 underapplied. 
B) $13,600 underapplied. 
C) $7,920 overapplied. 
D) $0.

Question 12

The general journal entry to record the issuance of the materials represented by the following materials requisitions for the month includes:

Accepted Answer

A) a debit to Materials Inventory,$15,945. 
B) a debit to Materials Inventory,$16,670. 
C) a debit to Work-in-Process Inventory,$15,945. 
D) a credit to Work-in-Process Inventory,$15,945.

Question 13

Which terms will make the following statement true? When manufacturing overhead is overapplied,the Manufacturing Overhead account has a __________ balance and applied manufacturing overhead is greater than __________ manufacturing overhead.

Accepted Answer

A) debit,actual. 
B) credit,actual. 
C) debit,estimated. 
D) credit,estimateD.When manufacturing overhead is overapplied,the Manufacturing Overhead account has a credit balance and applied manufacturing overhead is greater than actual manufacturing overheaD.

Question 14

The following are Mill Co.'s production costs for October:  What amount of costs should be traced to specific products in the production process? (CPA adapted)

Accepted Answer

A) $194,000. 
B) $190,000. 
C) $100,000. 
D) $90,000.

Question 15

Scottso Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $232,750,budgeted machine-hours were 17,500.Actual factory overhead was $227,830,actual machine-hours were 16,150.How much is the Over- or underapplied overhead?

Accepted Answer

A) $13,035 overapplied. 
B) $13,035 underapplied. 
C) $4,920 overapplied. 
D) $4,920 underapplieD.$227,830 - [($232,750/17,500)× 16,150] = 13,035 underapplieD.

Question 16

The following events took place at a manufacturing company for the current year: (1)Purchased $95,000 in direct materials.(2)Incurred labor costs as follows: (a)direct,$56,000 and (b)indirect,$13,600.(3)Other manufacturing overhead was $107,000,excluding indirect labor.(4)Transferred 80% of the materials to the manufacturing assembly line.(5)Completed 65% of the Work-in-Process during the year.(6)Sold 85% of the completed goods.(7)There were no beginning inventories.What is the value of the ending Finished Goods Inventory?

Accepted Answer

A) $13,261.50. 
B) $24,628.50. 
C) $26,481.00. 
D) $164,190.00.

Question 17

Two jobs were worked on during the year: Job A-101 and Job A-102.The number of direct labor-hours spent on Job A-101 and Job A-102 were 1,200 and 1,000,respectively.The actual manufacturing overhead was $37,000.What was the amount of manufacturing overhead applied to Job A-101?

Accepted Answer

A) $16,000. 
B) $18,000. 
C) $24,000. 
D) $44,000.

Question 18

Birk Co.uses a job order costing system.The following debits (credits)appeared in Birk's work-in-process account for the month of April:  Birk applies overhead to production at a predetermined rate of 80% of direct labor cost.Job No.5,the only job still in process on April 30 has been charged with direct labor of $2,000.What was the amount of direct material charged to Job No.5? (CPA adapted)

Accepted Answer

A) $3,000. 
B) $5,200. 
C) $8,800. 
D) $24,000.

Question 19

Service organizations,by their nature,cannot have a balance in Work-in-Process Inventory.A service may take several accounting periods to complete so there may very well be a Work-in-Process.

Accepted Answer

A) True 
 B)False

Question 20

Scottso Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much overhead would be applied to production?

Accepted Answer

A) $266,400. 
B) $274,320. 
C) $279,607. 
D) $287,920.

Exam 7: Job Costing

If a company multiplies its predetermined overhead rate by the actual activity level of its allocation base,it is using:

One difference between jobs and projects is the account titles used in the costing process.The main difference is the length of time to complete the work.

Complex jobs that take multiple time periods and require the work of many different departments,divisions,or subcontractors are called:

In a traditional job order costing system,the issue of indirect materials to a production department increases: (CPA adapted)

Which of the following companies would most likely use job costing?

Accounting for direct materials and direct labor is easier than accounting for manufacturing overhead costs.This is because direct costs are traceable to jobs while overhead is allocated.

Underapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.An underapplied overhead situation occurs when the actual overhead incurred exceeds the applied overhead.

Scottso Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much is the Over- or underapplied overhead?

The general journal entry to record the issuance of the materials represented by the following materials requisitions for the month includes:

Which terms will make the following statement true? When manufacturing overhead is overapplied,the Manufacturing Overhead account has a balance and applied manufacturing overhead is greater than manufacturing overhead.

The following are Mill Co.'s production costs for October: What amount of costs should be traced to specific products in the production process? (CPA adapted)

Scottso Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $232,750,budgeted machine-hours were 17,500.Actual factory overhead was $227,830,actual machine-hours were 16,150.How much is the Over- or underapplied overhead?

Two jobs were worked on during the year: Job A-101 and Job A-102.The number of direct labor-hours spent on Job A-101 and Job A-102 were 1,200 and 1,000,respectively.The actual manufacturing overhead was $37,000.What was the amount of manufacturing overhead applied to Job A-101?

Service organizations,by their nature,cannot have a balance in Work-in-Process Inventory.A service may take several accounting periods to complete so there may very well be a Work-in-Process.

Scottso Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much overhead would be applied to production?