question

A paper mill company like International Paper would most likely use job costing

answer

F

question

A food and beverage company like Coca-Cola would most likely use job costing

answer

F

question

Process costing is used by companies that produce large numbers of identical units of production in a continuous fashion

answer

T

question

Job costing systems accumulate the costs for each individual job

answer

T

question

Companies should always use job costing rather than process costing

answer

F

question

Generally Accepted Accounting Principles (GAAP) mandates the type of product costing system (job costing or process costing) that must be used by a manufacturer.

answer

F

question

Job costing should only be used by manufacturers

answer

F

question

The end goal of process costing and job costing at a manufacturing company is the same: to find the cost of producing one unit of product

answer

T

question

Job costing is often used by professional service providers, such as law firms.

answer

T

question

All manufacturers use either a pure process costing system or a pure job costing system

answer

F

question

Companies use job costing when their products or services vary in terms of materials needed, time required to complete the product, and/or the complexity of the production process

answer

T

question

A receiving report is typically a duplicate of the purchase order but without the prices and quantities pre-listed on the form

answer

T

question

For a manufacturing system, inventory flows from raw materials inventory to work in process inventory to finished goods inventory.

answer

T

question

A job cost record is a document that accumulates direct materials costs, direct labor costs and manufacturing overhead costs assigned to each individual job

answer

T

question

At a manufacturing company, inventory flows from work in process inventory, to raw materials inventory, to finished goods inventory.

answer

F

question

When raw materials are transferred out of the storeroom to the factory, their cost is transferred out of raw materials inventory and into work in process inventory.

answer

T

question

When the products are shipped to customers, the cost of manufacturing those products becomes Cost of Goods Sold (COGS) shown on the company's balance sheet.

answer

F

question

A production schedule indicates the quantity and types of inventory that are scheduled to be manufactured during the period.

answer

T

question

A labor time record identifies the employee and the amount of time the employee spent on a particular job

answer

T

question

A production schedule always covers a one-year period of time

answer

F

question

A purchase order is used to order needed materials from suppliers

answer

T

question

The quantities of incoming shipments of raw materials are counted and recorded on a purchase order.

answer

F

question

Manufacturing overhead may include depreciation on the factory plant and equipment, utilities to run the plant, property taxes and insurance on the plant, and salaries of plant janitors.

answer

T

question

Generally accepted accounting principles (GAAP) mandate that manufacturing overhead must be treated as an inventoriable product cost for financial reporting purposes

answer

T

question

Manufacturing overhead costs cannot be directly traced to jobs

answer

T

question

The key to allocating indirect manufacturing costs to jobs is to identify an appropriate allocation base

answer

T

question

Allocating manufacturing overhead to jobs simply means "splitting up" the total manufacturing overhead costs among the jobs produced during the year.

answer

T

question

An equal amount of manufacturing overhead should be allocated to each job

answer

F

question

Manufacturers follow four steps to implement a manufacturing overhead allocation system. In the first step, the company estimates its total manufacturing overhead costs for the coming year

answer

T

question

Manufacturers follow four steps to implement a manufacturing overhead allocation system. In the last step, to the company allocates some manufacturing overhead to each individual job

answer

T

question

Manufacturers follow four steps to implement a manufacturing overhead allocation system. In the last step, the company estimates the total amount of manufacturing overhead costs for the year

answer

F

question

The predetermined manufacturing overhead rate is calculated by dividing the total estimated manufacturing overhead costs by the total estimated amount of the allocation base

answer

T

question

The predetermined manufacturing overhead rate is calculated by multiplying the total estimated manufacturing overhead costs by the total estimated amount of the allocation base.

answer

F

question

The cost of wages paid to assembly-line workers should be treated as a manufacturing overhead cost

answer

F

question

The overhead allocation base should be the cost driver of manufacturing overhead costs.

answer

T

question

Management can use job cost information to help to determine how it will deal with pricing pressure from competitors.

answer

T

question

Management can use job cost information to control costs on jobs produced in the future

answer

T

question

The total cost of a job shown on the job cost record is the sum of the direct materials and direct labor traced to the job and the manufacturing overhead allocated to the job.

answer

T

question

The total cost of a job shown on the job cost record is the sum of the direct materials traced to the job and the manufacturing overhead allocated to the job

answer

F

question

If a job consists of a batch of identical units, managers find the unit cost by dividing the total job cost by the number of units in the job.

answer

T

question

The total cost of a job shown on the job cost record is the sum of the direct labor traced to the job and the manufacturing overhead allocated to the job.

answer

F

question

The total cost of a job shown on the job cost record is the sum of the direct materials and direct labor traced to the job divided by the manufacturing overhead allocated to the job.

answer

F

question

The gross profit on the sale of a job is the difference between the sales price and the total unit cost reported on the job cost record.

answer

T

question

If a manufacturer finds that the amount of manufacturing overhead allocated to a job is less than the actual amount of manufacturing overhead incurred, then the jobs are overcosted

answer

F

question

Overallocated manufacturing overhead costs occur when the manufacturing overhead costs allocated are greater than the amount actually incurred.

answer

T

question

If manufacturing overhead has been underallocated during the year, it means the jobs have been undercosted

answer

T

question

If manufacturing overhead has been overallocated during the year, it means the jobs have been overcosted.

answer

T

question

If the actual amount of the manufacturing overhead allocation base is greater than the estimated amount of the allocation base used to calculate the predetermined rate, then manufacturing overhead must have been underallocated.

answer

F

question

The underallocation or overallocation of overhead is a direct result of using a predetermined manufacturing overhead rate rather than the actual manufacturing overhead rate

answer

T

question

The amount of overallocation or underallocation is found by taking the difference between the amount of overhead allocated during the year and the amount of overhead estimated for the year

answer

F

question

The amount of overallocation or underallocation is typically corrected by adjusting Cost of Goods Sold on the income statement

answer

T

question

An overallocation of manufacturing overhead is typically corrected by decreasing Cost of Goods Sold on the income statement

answer

T

question

The amount of overallocation or underallocation is found by taking the difference between the amount of overhead allocated during the year and the amount of overhead incurred during the year.

answer

T

question

An underallocation of manufacturing overhead is typically corrected by decreasing Cost of Goods Sold on the income statement

answer

F

question

In job costing, the purchase of raw materials is recorded as a debit to the Raw Materials Inventory account and a credit to accounts payable

answer

T

question

When an item is sold, Finished Goods Inventory account is credited and Cost of Goods Sold is debited

answer

T

question

In job costing, when indirect materials are requisitioned for a job, the Raw Materials Inventory account is credited.

answer

T

question

In job costing, when raw materials are requisitioned for a job, the Raw Materials Inventory account is credited

answer

T

question

Actual manufacturing overhead costs are accumulated as debits to a single general ledger account called Manufacturing Overhead.

answer

T

question

The entry to allocate manufacturing overhead costs to work-in-process requires a debit to Work-in Process account

answer

T

question

The Manufacturing Overhead account is credited for actual manufacturing overhead costs incurred during the period.

answer

F

question

The entry to transfer sold goods includes a debit to the Finished Goods Inventory account.

answer

F

question

The Finished Goods Inventory account is debited when the product is sold.

answer

F

question

Job costing is not commonly used by service firms (such as law firms) or trades people (such as auto mechanics).

answer

F

question

Service firms follow the same approach for indirect costs as manufacturing companies because they develop a predetermined indirect cost allocation rate.

answer

T

question

A service firm's costs are comprised of direct materials, direct labor and manufacturing overhead

answer

F

question

A labor time record is an essential component of accounting in a service firm

answer

T

question

Since a service firm does not carry a large amount of inventory, it is not necessary to know the individual costs related to each individual job.

answer

F

question

The most significant cost for a service firm is direct labor cost

answer

T

question

The main driver of indirect costs for service firms is usually labor hours

answer

T

question

When job costing is used at a service company, direct costs of serving the client are traced to the job, whereas the indirect costs of serving the client are allocated to the job.

answer

T

question

) At a service company, the indirect costs of serving the client consists of operating expenses

answer

T

question

At a service company, the indirect costs of serving the client include manufacturing overhead

answer

F

question

Which product costing system would be better for custom-order products?

answer

Job costing system

question

A job costing system can be used by which types of companies?

answer

Service, manufacturing, and merchandising businesses

question

Which product costing system would better account for a unique product?

answer

Job costing system

question

The two basic types of costing systems are

answer

job costing and process costing

question

Which of the following industries would be most likely to use a job costing system?

answer

Commercial building construction

question

Which of the following is an example of an industry that would use a process costing—rather than a job costing—system?

answer

Coca-Cola

question

Which of the following is an example of an industry that would use a process costing—rather than a job costing—system?

answer

Pepsi

question

Which of the following is most likely not to use process costing?

answer

Ashley Custom Furnishings

question

A manufacturer of plywood would use what type of product costing system?

answer

Process costing

question

A manufacturer of luxury yachts would use which type of costing system?

answer

Job costing

question

An example of an industry that uses process costing might be a

answer

company that makes cement.

question

Job order costing might be used by a

answer

custom home builder.

question

________ is the system for assigning costs to unique cost objects.

answer

Job costing

question

Which of the following types of costing is used for many similar products?

answer

Process costing

question

Which of these documents authorizes the purchase of specific raw materials from a specific supplier?

answer

Purchase order

question

A ________ is used to accumulate the costs of a job.

answer

job cost record

question

The ________ substantiates the total of the raw materials inventory account shown on the company's balance sheet.

answer

raw materials records

question

Which of these documents informs the storeroom to send specific materials to the factory floor?

answer

Materials requisition

question

When direct materials are requisitioned, they flow directly into

answer

work in process inventory account.

question

The assignment of direct and indirect materials to a cost object reduces the

answer

raw materials inventory account.

question

A ________ is a source document used to track employee hours.

answer

labor time record

question

A ________ is used to accumulate all of the direct materials and direct labor used on the job, as well as the manufacturing overhead allocated to the job.

answer

job cost record

question

In the basic flow of inventory through a manufacturing system, which of the following occurs first in a job costing system?

answer

Raw materials inventory

question

In the basic flow of inventory through a manufacturing system, which of the following occurs second in the job costing system?

answer

Work in process inventory

question

In the basic flow of inventory through a manufacturing system, which of the following occurs third in the job costing system?

answer

Finished goods inventory

question

In the basic flow of inventory through a manufacturing system, which of the following occurs last in the job costing system?

answer

Cost of goods sold

question

A ________ is a document manufacturing production personnel use to request that the itemized materials be sent from the showroom into the factory.

answer

materials requisition

question

An internal request to transfer raw materials requires personnel to complete a

answer

materials requisition document.

question

When used, raw materials

answer

cannot be determined with the information provided.

question

Payroll-related costs for factory employees who do not work directly on the product are considered

answer

manufacturing overhead.

question

The first three steps to allocating manufacturing overhead are taken before the year begins and include all of the following except

answer

allocating some manufacturing overhead to each individual job.

question

What is the primary factor that causes a "cost" called?

answer

Cost driver

question

A(n) ________ is an estimated manufacturing overhead rate computed during the year.

answer

predetermined manufacturing overhead rate

question

Assigning manufacturing overhead costs and other indirect costs is called

answer

cost allocation

question

Manufacturers follow four steps to implement a manufacturing overhead allocation system. The last step is

answer

allocate some manufacturing overhead to each individual job.

question

Manufacturers follow four steps to implement a manufacturing overhead allocation system. What is the first step?

answer

Estimate total manufacturing overhead costs for the coming year.

question

Manufacturers follow four steps to implement a manufacturing overhead allocation system. Which step is not performed before the year begins?

answer

Allocate some manufacturing overhead to each individual job.

question

Manufacturing overhead is allocated on the basis of

answer

machine hours. direct labor hours. direct labor costs. D) all of the above.

question

Allocating manufacturing overhead costs is done

answer

during the period.

question

When is the predetermined manufacturing overhead rate computed?

answer

Before the period starts

question

How do you calculate the predetermined manufacturing overhead rate used to allocate manufacturing overhead costs?

answer

By dividing the total estimated manufacturing overhead costs by the total estimated amount of the allocation base

question

Which of the following would be an example of a typical manufacturing overhead cost?

answer

Depreciation on factory equipment

question

A typical manufacturing overhead cost would be

answer

depreciation on the plant.

question

Manufacturing overhead would include

answer

all manufacturing costs except direct materials and direct labor.

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