Question 1

Why do most manufacturers use a perpetual inventory system?

Accepted Answer

A)  It is a requirement of Revenue Canada for all Canadian companies.
B)  It is generally accepted accounting principles.
C)  It is required for all manufacturers.
D)  It is a characteristic of a proper cost accounting system.E) B) and C)
F) All of the above

Question 2

Which of the following is the best way to handle manufacturing overhead costs in order to get the most timely job cost information?

Accepted Answer

A)  The company should apply overhead using an estimated rate throughout the year.
B)  The company should determine an allocation rate as soon as the actual costs are known, and then apply manufacturing overhead to jobs.
C)  The company should add actual manufacturing overhead costs to jobs as soon as the overhead costs are incurred.
D)  The company should account for only the direct production costs.E) B) and C)
F) A) and C)

Question 3

Use the following information to answer questions 
A company expected its annual overhead costs to be $750,000 and machine hours to equal 100,000 hours.Actual overhead was $745,000, and actual machine hours totaled 97,000 hours.
-How much is the company's predetermined overhead rate to the nearest cent, assuming overhead is applied based on machine hours?

Accepted Answer

A)  $7.45
B)  $7.50
C)  $7.68
D)  $7.73E) None of the above
F) B) and C)

Question 4

When direct materials are requisitioned from the storeroom, the cost of the materials should be removed from the Work in Process Inventory account and added to the job cost sheets for the individual jobs on which the material was used.

Accepted Answer

A) True 
 B)False

Question 5

During 2012, Crema Manufacturing expected Job 59 to cost $300,000 of overhead, $500,000 of material, and $200,000 in labour.Crema applied overhead based on direct labour cost.Actual production required an overhead cost of $280,000, $550,000 in materials used; and $220,000 in labour.All of the goods were completed.How much is the amount of over/under applied overhead?

Accepted Answer

A)  $50,000 under-applied
B)  $50,000 over-applied
C)  $20,000 under-applied
D)  $20,000 over-appliedE) B) and D)
F) A) and C)

Question 6

Which one of the following types of companies would most likely use a job cost system?

Accepted Answer

A)  Manufacturer of duct tape
B)  Producer of movies
C)  Manufacturer of pencils
D)  Manufacturer of petroleumE) A) and B)
F) None of the above

Question 7

Luca Company over-applied manufacturing overhead during 2012.Which one of the following is part of the year end entry to dispose of the over-applied amount assuming the amount is material?

Accepted Answer

A)  An increase to Finished Goods
B)  A decrease to Applied Overhead
C)  A decrease to Work in Process Inventory
D)  An increase to Cost of Goods SoldE) A) and B)
F) A) and C)

Question 8

You want to determine the amount of cost of goods sold.Where is the best place to find the information you need?

Accepted Answer

A)  From the Raw Materials Inventory control account
B)  From an analysis of all the control accounts in the cost system
C)  From the work in process inventory records
D)  From the finished goods inventory recordsE) All of the above
F) None of the above

Question 9

On the financial statements at year end, all product costs could be found in raw materials, work in process, finished goods, and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 10

The transfer of direct materials to the production area causes an increase in work in process.

Accepted Answer

A) True 
 B)False

Question 11

What is the cause of a debit balance remaining in the Manufacturing Overhead account at the end of the accounting period?

Accepted Answer

A)  Overhead has been over-applied.
B)  More overhead cost was incurred than the amount applied during the year.
C)  Not all costs have been posted to the jobs.
D)  The overhead assigned to Work in Process Inventory is more than the overhead incurred.E) All of the above
F) A) and D)

Question 12

Which transaction is used to recognize the acquisition of raw materials on account?

Accepted Answer

A)  Debit to Accounts Payable and credit to Raw Materials Inventory
B)  Debit to Raw Materials Inventory and credit to Accounts Payable
C)  Debit to Work in Process Inventory and credit to Accounts Payable
D)  Debit to Manufacturing Overhead, debit to Raw Materials Inventory, and credit to Accounts PayableE) All of the above
F) B) and C)

Question 13

A company using a computerized accounting system gets job cost information more quickly than provided through a manual system.

Accepted Answer

A) True 
 B)False

Question 14

Raw Materials Inventory, Work in Process, and Finished Goods are all inventory accounts used in the general ledger when a job order cost accounting system is used.

Accepted Answer

A) True 
 B)False

Question 15

Which one of the following is used to calculate the predetermined overhead rate?

Accepted Answer

A)  Applied overhead costs
B)  Actual overhead costs
C)  Predetermined overhead costs
D)  Estimated overhead costsE) B) and D)
F) B) and C)

Question 16

What is the rationale behind applying overhead at an estimated rate rather than an actual rate such as direct labour or materials?

Accepted Answer

A)  Accounting rules permit this approach
B)  Waiting to the end of an accounting period to allocate costs is inefficient
C)  Overhead costs fluctuate widely month to month and these fluctuations can distort profitability
D)  Overhead costs are incurred evenly month to month as they include mostly fixed costsE) A) and C)
F) C) and D)

Question 17

Which one of the following appears on the job cost sheet?

Accepted Answer

A)  The cost to date of all completed jobs
B)  The total materials purchased during the year
C)  Direct materials chargeable to a specific job
D)  The total cost of goods soldE) None of the above
F) All of the above

Question 18

Which one of the following is a source document that impacts the job cost sheet?

Accepted Answer

A)  Labour time tickets
B)  Finished goods shipping documents
C)  Raw material receiving slips
D)  Material purchase ordersE) All of the above
F) C) and D)

Question 19

Which one of the following describes an activity base?

Accepted Answer

A)  A denominator used by management based on estimated useful lives of the company's plant assets
B)  A measure which is estimated by management based on prior year's operations
C)  A measure that has a correlation with assigning overhead
D)  A guess by management on a fair method of applying overheadE) A) and C)
F) A) and D)

Question 20

What is one of the key distinguishing features that separate a job-order costing system from a process costing system?

Accepted Answer

A)  Job order costing is best suited for small work or jobs
B)  Process costing emphasizes larger business activities
C)  Process costing is time-based whereas job-order costing is more item-specific
D)  Process costing is more item-specific whereas job-order costing is more time-basedE) A) and B)
F) A) and C)

Exam 3: Job Order Costing

What is one of the key distinguishing features that separate a job-order costing system from a process costing system?

Correct Answer
verified

What is the rationale behind applying overhead at an estimated rate rather than an actual rate such as direct labour or materials?

Correct Answer
verified

Raw Materials Inventory, Work in Process, and Finished Goods are all inventory accounts used in the general ledger when a job order cost accounting system is used.

Correct Answer
verified

When direct materials are requisitioned from the storeroom, the cost of the materials should be removed from the Work in Process Inventory account and added to the job cost sheets for the individual jobs on which the material was used.

Correct Answer
verified

Which one of the following describes an activity base?

Correct Answer
verified

Which transaction is used to recognize the acquisition of raw materials on account?

Correct Answer
verified

Which one of the following appears on the job cost sheet?

Correct Answer
verified

Why do most manufacturers use a perpetual inventory system?

Correct Answer
verified

Which of the following is the best way to handle manufacturing overhead costs in order to get the most timely job cost information?

Correct Answer
verified

Correct Answer
verified

The transfer of direct materials to the production area causes an increase in work in process.

Correct Answer
verified

You want to determine the amount of cost of goods sold.Where is the best place to find the information you need?

Correct Answer
verified

Which one of the following types of companies would most likely use a job cost system?

Correct Answer
verified

A company using a computerized accounting system gets job cost information more quickly than provided through a manual system.

Correct Answer
verified

Which one of the following is used to calculate the predetermined overhead rate?

Correct Answer
verified

Correct Answer
verified

Which one of the following is a source document that impacts the job cost sheet?

Correct Answer
verified

Luca Company over-applied manufacturing overhead during 2012.Which one of the following is part of the year end entry to dispose of the over-applied amount assuming the amount is material?

Correct Answer
verified

What is the cause of a debit balance remaining in the Manufacturing Overhead account at the end of the accounting period?

Correct Answer
verified

On the financial statements at year end, all product costs could be found in raw materials, work in process, finished goods, and cost of goods sold.

Correct Answer
verified

Exam 3: Job Order Costing

What is one of the key distinguishing features that separate a job-order costing system from a process costing system?

Correct AnswerverifiedShow Answer

What is the rationale behind applying overhead at an estimated rate rather than an actual rate such as direct labour or materials?

Correct AnswerverifiedShow Answer

Raw Materials Inventory, Work in Process, and Finished Goods are all inventory accounts used in the general ledger when a job order cost accounting system is used.

Correct AnswerverifiedShow Answer

When direct materials are requisitioned from the storeroom, the cost of the materials should be removed from the Work in Process Inventory account and added to the job cost sheets for the individual jobs on which the material was used.

Correct AnswerverifiedShow Answer

Which one of the following describes an activity base?

Correct AnswerverifiedShow Answer

Which transaction is used to recognize the acquisition of raw materials on account?

Correct AnswerverifiedShow Answer

Which one of the following appears on the job cost sheet?

Correct AnswerverifiedShow Answer

Why do most manufacturers use a perpetual inventory system?

Correct AnswerverifiedShow Answer

Which of the following is the best way to handle manufacturing overhead costs in order to get the most timely job cost information?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The transfer of direct materials to the production area causes an increase in work in process.

Correct AnswerverifiedShow Answer

You want to determine the amount of cost of goods sold.Where is the best place to find the information you need?

Correct AnswerverifiedShow Answer

Which one of the following types of companies would most likely use a job cost system?

Correct AnswerverifiedShow Answer

A company using a computerized accounting system gets job cost information more quickly than provided through a manual system.

Correct AnswerverifiedShow Answer

Which one of the following is used to calculate the predetermined overhead rate?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is a source document that impacts the job cost sheet?

Correct AnswerverifiedShow Answer

Luca Company over-applied manufacturing overhead during 2012.Which one of the following is part of the year end entry to dispose of the over-applied amount assuming the amount is material?

Correct AnswerverifiedShow Answer

What is the cause of a debit balance remaining in the Manufacturing Overhead account at the end of the accounting period?

Correct AnswerverifiedShow Answer

On the financial statements at year end, all product costs could be found in raw materials, work in process, finished goods, and cost of goods sold.

Correct AnswerverifiedShow Answer

Correct Answer
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