Chapter 5: Job Order

The work-in-process account consists of all the job-order cost sheets for the completed jobs. True False

False

Overhead costs are assigned to Finished Goods using a predetermined rate. True False

False; they are assigned to WIP with predetermined rate

The predetermined overhead rate is usually calculated a. at the beginning of each month. b. at the end of each month. c. at the beginning of the year. d. at the end of the year.

c. at the beginning of the year.

Time tickets are filled out for a. both direct laborers and indirect laborers. b. supervisors. c. direct laborers. d. indirect laborers. e. direct materials.

c. direct laborers.

Which of the following are easy to trace to individual jobs? a. direct materials and overhead b. depreciation on machinery and indirect labor c. direct materials and direct labor d. overhead and indirect labor e. direct labor and overhead

c. direct materials and direct labor

The predetermined overhead rate is calculated by a. estimated annual overhead/Estimated manufacturing cost. b. actual annual overhead/Estimated annual activity level. c. estimated annual overhead/Estimated annual activity level. d. estimated annual overhead/Actual annual activity level. e. actual annual overhead/Actual annual activity level.

c. estimated annual overhead/Estimated annual activity level.

Costs associated with selling and general administrative activities are not a. period costs. b. nonmanufacturing costs. c. manufacturing costs. d. period costs and nonmanufacturing costs. e. any of these.

c. manufacturing costs.

The method that assigns support department costs by giving partial recognition to support department interactions is known as... a. the reciprocal method b. the direct method c. the sequential method d. none of these are correct

c. the sequential method

Which of the following is true? a. The adjusted cost of goods sold is equal to normal cost of goods sold plus or minus the overhead variance. b. If the overhead variance shows overapplied overhead, then that amount would be subtracted from normal cost of goods sold. c. Variances in overhead are expected every month. d. All of these. e. None of these.

d. All of these.

The raw materials account is an inventory account located on the income statement. True False

False

Actual overhead costs are accumulated in the overhead control account. True False

True

When materials are put into production, they are taken from the Raw Materials account and put into the Work in Process account. a. true b. false

True

Which of the following sentences is not true? a. Actual overhead costs always enter the Work-in-Process account. b. The cost of a job includes direct materials, direct labor, and applied overhead. c. When a job is complete, it must leave Work-in-Process and be entered into Finished Goods or Cost of Goods Sold. d. All of these are correct. e. None of these are correct.

a. Actual overhead costs always enter the Work-in-Process account.

An example of a support department is... a. Human Resources (Personnel) b. Product Assembly c. Painting units produced d. Stacking units produced

a. Human Resources (Personnel)

Which of the following is not true about job-order costing? a. It is used in firms that produce homogeneous products. b. The cost of each job is accumulated on the job-order cost sheet. c. The key document for accumulating manufacturing costs is the job-order cost sheet. d. All of these are correct. e. None of these are correct.

a. It is used in firms that produce homogeneous products.

Which of the following statements is true about overhead? a. Overhead costs are not incurred uniformly throughout the year. b. Overhead costs have a definite, identifiable relationship with units produced. c. Low production in one month would give rise to low unit overhead costs. d. All of these are correct. e. None of these are correct.

a. Overhead costs are not incurred uniformly throughout the year.

If actual overhead is greater than applied overhead, the variance is called underapplied overhead. a. True b. False

a. True

Production costs consist of direct materials, direct labor, and overhead. a. True b. False

a. True

The difference between actual overhead and applied overhead is called an overhead variance. a. True b. False

a. True

The key feature of job-order costing is that the cost of one job differs from that of another job and must be kept track of separately. a. True b. False

a. True

The three manufacturing cost elements are direct materials, direct labor, and overhead. a. True b. False

a. True

Using normal costing requires that a. actual overhead costs are not assigned directly to jobs. b. predetermined rates are not used to assign overhead. c. applied overhead is not calculated on a job specific basis. d. Neither plantwide or departmental rates can be used to assign overhead. e. All of these are correct.

a. actual overhead costs are not assigned directly to jobs.

Which of the following costs is not included on a job-order cost sheet? a. actual plantwide overhead costs b. direct material costs c. direct labor costs d. applied plantwide overhead costs

a. actual plantwide overhead costs

The document that lists the total cost for a single job is a a. job-order cost sheet. b. materials requisition form. c. time ticket. d. purchase order. e. None of these are correct.

a. job-order cost sheet.

Which method of measuring costs associated with production is more widely used in practice? a. normal costing b. actual costing c. both are used equally. d. neither one is used. e. cannot be determined.

a. normal costing

Those departments that provide essential services to producing departments are referred to as ... a. support departments b. profit centers c. revenue generating departments d. production departments

a. support departments

The method that assigns support department costs by giving full recognition to support department interactions is known as... a. the reciprocal method b. none of these are correct c. the sequential method d. the direct method

a. the reciprocal method

The use of normal costing means that actual overhead costs are assigned directly to jobs. a. True b. False

b. False

Using a time ticket, the cost accounting department can enter the cost of direct materials onto the correct job-order cost sheet. a. True b. False

b. False

Actual overhead is reconciled with applied overhead at the beginning of the period. a. True b. False

b. False, they are reconciled at the end

A normal job-order costing system is a system that uses: a. actual costs for direct materials and estimated costs for direct labor and overhead. b. actual costs for direct materials and direct labor and estimated costs for overhead. c. estimated costs for direct materials, direct labor, and overhead. d. actual costs for direct materials and overhead, estimated costs for direct labor.

b. actual costs for direct materials and direct labor and estimated costs for overhead.

Using normal costing, which costs never enter the work-in-process account? a. applied overhead b. actual overhead c. direct materials d. direct labor e. None of these.

b. actual overhead

In a normal costing system, actual overhead is used to arrive at the cost of goods manufactured. a. true b. false

b. false

In an actual cost system, actual direct materials, actual direct labor and estimated overhead are used to determine unit cost. a. true b. false

b. false

The costs of a job are accounted for on the... a. sales invoice b. job-order cost sheet c. time ticket d. materials requisition sheet

b. job-order cost sheet

Which form asks for type, quantity, unit price of direct materials issued, and for the number of the job? a. time ticket b. materials requisition form c. job-order cost sheet d. None of these are correct. e. All of these are correct.

b. materials requisition form

The departments responsible for creating products or services that are sold to customers are referred to as... a. cost centers b. producing departments c. support departments d. profit making departments

b. producing departments

The method that assigns support department costs only to producing departments in proportion to each producting department's usage of the service is known as... a. the sequential method b. the direct method c. the reciprocal method d. none of these are correct

b. the direct method

Which of the following is the assignment process used with normal costing? a. Actual direct materials, actual direct labor and actual overhead cost are assigned to products. b. All manufacturing costs are assigned using predetermined rates. c. Actual direct material and direct labor costs are assigned to products, but overhead costs are assigned using predetermined rates. d. Actual direct labor cost is assigned to products, but direct material and overhead costs are assigned using predetermined rates. e. Actual direct materials cost is assigned to products, but direct labor and overhead costs are assigned using predetermined rates.

c. Actual direct material and direct labor costs are assigned to products, but overhead costs are assigned using predetermined rates.

The ending balance of which account is determined by simply summing up the total cost from each unfinished job (which is found on job cost sheets)? a. Raw Materials b. Overhead Control c. Work in Process d. Finished Goods

c. Work in Process

Which of the following is not a manufacturing cost element? a. direct materials b. direct labor c. advertising expense d. overhead e. All of these are correct.

c. advertising expense

Which of the following statements is true? a. There will be many different jobs on a job-order cost sheet. b. None of these. c. Work-in-process consists of all complete work. d. Time tickets are used to post the cost of direct labor to individual jobs. e. Direct labor is allocated to jobs along with overhead using a cost driver.

d. Time tickets are used to post the cost of direct labor to individual jobs.

The order that cost elements flow through accounts until they are recognized as an expense is a. Work-in-Process, Cost of Goods Sold, Finished Goods b. Finished Goods, Work-in-Process, Cost of Goods Sold c. Finished Goods, Cost of Goods Sold, Work-in-Process d. Work-in-Process, Finished Goods, Cost of Goods Sold

d. Work-in-Process, Finished Goods, Cost of Goods Sold

Manufacturing overhead a. consists of all manufacturing costs other than direct materials. b. consists of all costs other than direct materials and direct labor. c. consists of all costs other than direct materials. d. consists of all manufacturing costs other than direct materials and direct labor.

d. consists of all manufacturing costs other than direct materials and direct labor.

Which of the following is not on a time ticket? a. employee's name b. employee's wage rate c. hours worked on each job d. cost of materials e. All of these are on a time ticket.

d. cost of materials

Labor cost flows reflect a. administration cost and indirect cost. b. administration cost. c. indirect labor cost. d. direct labor cost. e. both indirect and direct labor cost.

d. direct labor cost.

Production costs do not include a. direct materials. b. direct labor. c. variable overhead. d. fixed overhead. e. All of these are production costs.

e. All of these are production costs.