Ch. 4 - Pearson HW
How does a job-costing system differ from a process-costing system? A. A job-costing system assigns costs to distinct units; a process-costing system assigns costs to masses of similar units. B. A process-costing system allocates indirect costs to products; a job-costing system does not allocate indirect costs to products. C. A job-costing system allocates indirect costs to products; a process-costing system does not allocate indirect costs to products. D. A job-costing system assigns costs to masses of similar units; a process-costing system assigns costs to distinct units.
A. A job-costing system assigns costs to distinct units; a process-costing system assigns costs to masses of similar units.
Identify three major source documents used in job-costing systems. A. job cost record (sheet), materials requisition record, and labor time record B. balance sheet, income statement, and cash flow statement C. accounts receivable aging report, accounts payable aging report, and inventory control report D. general journal, general ledger, and trial balance
A. job cost record (sheet), materials requisition record, and labor time record
Why might an advertising agency use job costing for an advertising campaign by PepsiCo, whereas a bank might use process costing to determine the cost of checking account deposits? A. Whenever a product or service is unique or distinct, process costing is the most efficient way to assign costs. Therefore since each banking transaction is unique, the banks use process costing to determine the cost of checking account deposits. B. Job costing enables all the specific aspects of each job to be identified, whereas process costing can be used to compute the cost of numerous identical or similar services. C. An advertising agency provides the same service to all its clients, while a bank supplies its customers with specialized services. For that reason an advertising agency would use job costing to monitor the costs of an advertising campaign by PepsiCo. D. Job costing can be used to compute the cost of masses of similar services, in contrast process costing enables all the specific aspects of each job to be identified individually.
B. Job costing enables all the specific aspects of each job to be identified, whereas process costing can be used to compute the cost of numerous identical or similar services.
Determine whether this statement is true or false. "In a normal-costing system, the amounts in the Manufacturing Overhead Control account will always equal the amounts in the Manufacturing Overhead Allocated account." A. The statement is true. B. The statement is false.
B. The statement is false.
What is the advantage of using computerized source documents to prepare job-cost records? A. timeliness of the recordslong dash—ensuring that the documents are available when needed B. accuracy of the recordslong dash—incorrect recording of amounts, incorrect job numbers, materials being "borrowed" for another job C. safeguarding the records from events such as theft or fire D. none of the above
B. accuracy of the recordslong dash—incorrect recording of amounts, incorrect job numbers, materials being "borrowed" for another job
Electronic Data Interchange (EDI) is helpful to managers because A. it lowers manufacturing costs. B. it ensures that a purchase order is transmitted quickly and accurately to suppliers with minimum paperwork and costs. C. it increases manufacturing productivity. D. it increases product quality.
B. it ensures that a purchase order is transmitted quickly and accurately to suppliers with minimum paperwork and costs.
Identify the ways in which a house construction company may use job-cost information. A. (a) to divide the total costs of constructing all the houses by the total number of houses built to obtain an average cost of each house, and (b) to apply the average per-unit cost to each of the identical or similar houses built in that period B. (a) to determine the profitability of individual jobs, (b) to assist in bidding on future jobs, and (c) to evaluate professionals who are in charge of managing individual jobs C. (a) to report profit results to shareholders, and (b) to report taxable profits to tax authorities D. None of the above.
B. (a) to determine the profitability of individual jobs, (b) to assist in bidding on future jobs, and (c) to evaluate professionals who are in charge of managing individual jobs
A company might use budgeted costs rather than actual costs to compute direct-labor rates because A. the budgeted costs are more accurate. B. the budgeted cost will result in lower corporate income taxes. C. it may be difficult to trace direct labor costs to jobs as they are completed. D. the budgeted costs will result in a higher gross margin.
C. it may be difficult to trace direct labor costs to jobs as they are completed.
The five-step decision-making process includes: A. (1) Research and development, (2) Making decisions by choosing among alternatives, (3) Production, (4) Distribution, and (5) Customer service. B. (1) Research and development, (2) Production, (3) Marketing, (4) Distribution, and (5) Customer service. C. (1) Identifying the problem and uncertainties, (2) Obtaining information, (3) Making predictions about the future, (4) Making decisions by choosing among alternatives, and (5) Implementing the decision, evaluating performance and learning. D. (1) Identifying the problem and uncertainties, (2) Research and development, (3) Making decisions by choosing among alternatives, and (4) Implementing the decision, evaluating performance and learning, and (5) Customer service.
C. (1) Identifying the problem and uncertainties, (2) Obtaining information, (3) Making predictions about the future, (4) Making decisions by choosing among alternatives, and (5) Implementing the decision, evaluating performance and learning.
Identify the appropriate way(s) to dispose of under- or overallocated overhead costs. A. (1) Proration to materials inventory, finished goods and cost of good sold, (2) Year-end write-off to work in process inventory, (3) Restatement of all overhead entries using budgeted indirect costs rates rather than actual indirect cost. B. (1) Proration to all operating expense accounts, (2) Year-end write-off to miscellaneous expense, (3) Restatement of all overhead entries using budgeted indirect costs rates rather than actual indirect cost. C. (1) Proration to work in process, finished goods and cost of good sold, (2) Year-end write-off to cost of goods sold, (3) Restatement of all overhead entries using actual indirect costs rates rather than budgeted indirect cost rates. D. No entry is required to dispose of over or under-allocated overhead.
C. (1) Proration to work in process, finished goods and cost of good sold, (2) Year-end write-off to cost of goods sold, (3) Restatement of all overhead entries using actual indirect costs rates rather than budgeted indirect cost rates.
Distinguish between actual costing and normal costing. A. Actual costing and normal costing differ in their use of actual or budgeted quantities of direct-cost inputs. B. Actual costing and normal costing differ in their use of actual or budgeted direct-cost rates. C. Actual costing and normal costing differ in their use of actual or budgeted quantities of cost-allocation bases. D. Actual costing and normal costing differ in their use of actual or budgeted indirect-cost rates.
D. Actual costing and normal costing differ in their use of actual or budgeted indirect-cost rates.
Identify the reason(s) why most organizations use an annual period rather than a weekly or monthly period to compute budgeted indirect-cost rates. A. The numerator reasonlong dash—the longer time period, the less influence of seasonal patterns. B. The denominator reasonlong dash—the longer the time period, the less the effect of variations in output levels on the allocation of fixed costs. C. Neither A nor B. D. Both A and B.
D. Both A and B.
How can management accountants help improve quality and achieve timely product deliveries? A. Management accountants analyze and evaluate the costs of only financial information, to correct any irregularities and provide faster customer service. B. Management accountants help improve quality and achieve timely product deliveries by focusing on reporting to external parties such as investors, government agencies, banks, and suppliers. C. Management accountants can improve quality by only reporting an organization's current quality controls and correct any irregularities. D. Management accountants analyze and evaluate the costs and benefits of both financial and non-financial information, to suggest new quality initiatives such as TQM or providing faster customer service.
D. Management accountants analyze and evaluate the costs and benefits of both financial and non-financial information, to suggest new quality initiatives such as TQM or providing faster customer service.
Identify three different debit entries to the Work-in-Process Control T-account under normal costing. A. direct materials purchased, completion and transfer of jobs to finished goods, sale of completed goods B. direct materials purchased, manufacturing overhead incurred, completion and transfer of jobs to finished goods C. direct materials purchased, indirect manufacturing labor paid to employees, manufacturing overhead incurred D. direct materials used, direct manufacturing labor billed to a job, manufacturing overhead allocated to a job
D. direct materials used, direct manufacturing labor billed to a job, manufacturing overhead allocated to a job
Select examples of two cost objects in companies using job costing. A. direct costs and indirect costs B. fixed costs and variable costs C. cost pool and cost allocation base D. products or jobs and responsibility centers or departments
D. products or jobs and responsibility centers or departments
Identify the seven steps in job costing.
Step 1 Identify the job that is the chosen cost object. Step 2 Identify the direct costs of the job. Step 3 Select the cost-allocation bases to use for allocating indirect costs to the job. Step 4 Identify the indirect costs associated with each cost-allocation base. Step 5 Compute the rate per unit of each cost-allocation base used to allocate indirect costs to the job. Step 6 Compute the indirect costs allocated to the job. Step 7 Compute the total cost of the job by adding all direct and indirect costs assigned to the job.
Cost-allocation base
a factor that links in a systematic way an indirect cost or group of indirect costs to a cost object.
Cost pool
a grouping of individual indirect cost items
Cost tracing
the assigning of direct costs to the chosen cost object
Cost allocation
the assigning of indirect costs to the chosen cost object.
