CH 4 311

Identify the ways in which a house construction company may use job-cost information. A) (a) to determine the profitability of individual jobs, (b) to assist in bidding on future jobs, and (c) to evaluate professionals are in charge of managing individual jobs B) (a) to divide the total cost of constructing all the houses by the total number of houses built to obtain an average cost of house, and (b) to apple the average per-unit cost to each of the identical or similar houses built in the period. C) (a) to report profit results to shareholders, and (b) to report taxable profits to tax authorities D) none of the above.

A) (a) to determine the profitability of individual jobs, (b) to assist in bidding on future jobs, and (c) to evaluate professionals are in charge of managing individual jobs

Distinguish between actual costing and normal costing. A) Actual costing and normal costing differ in their use of actual or budgeted indirect-cost rates. B) Actual costing and normal costing differ in their use of actual or budgeted direct-cost rate. C) Actual costing and normal costing differ in their use of actual or budgeted quantities of direct-cost inputs D) Actual costing and normal costing differ in their use of actual or budgeted quantities of cost allocation bases.

A) Actual costing and normal costing differ in their use of actual or budgeted indirect-cost rates.

Identify three different debit entries to the Work-in-Process Control T-account under normal costing. A) direct materials use, direct manufacturing labor billed to a job, manufacturing overhead allocated to a job 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 purchased, completion and transfer of jobs finished good, sale of completed goods

A) direct materials use, direct manufacturing labor billed to a job, manufacturing overhead allocated to a job

How does a job-costing system differ from a process-costing system? A) A Job-costing system assigns cost to masses of similar units; a process-costing system assigns cost to distinct units. B) A job-costing systems assigns cost to distinct units; a process-costing assigns cost to masses of similar units C) A process-costing system allocates indirect costs to products to product; a job costing system does not allocate indirect cost to products D) A job-costing system allocates indirect cost to products; a process-costing system does not allocate indirect cost to products.

B) A job-costing systems assigns cost to distinct units; a process-costing assigns cost to masses of similar units

Which of the following best describes cost allocation? A) A factor that links in a systematic way an indirect cost or group of indirect costs to a cost object. B) The assigning of indirect cost to the chosen cost object. C) A group of individual cost items. D) The assigning of direct cost to the chosen object.

B) The assigning of indirect cost to the chosen cost object.

Identify the main concern about source documents used to prepare job-cost records. A) timeliness of the records- ensuring that the documents are available when needed B) accuracy of the records- incorrect recording of amounts, incorrect job numbers, materials being "borrowed" for another job C) safeguarding the record from events such as theft or fire D) none of the above

B) accuracy of the records- incorrect recording of amounts, incorrect job numbers, materials being "borrowed" for another job

Determine whether this statement is true or false. "In a normal-costing system, the amounts in the Manufacturing Overhead Allocated account will always equal the amount in the Manufacturing Overhead Allocated account" A) The statement is true. B) the statement is false.

B) the statement is false.

Identify the appropriate way(s) to dispose of under-or over allocated overhead costs. A) (1) Proration to materials inventory, finished goods and cost of good sold, (2) Yea-end write-off to work in process inventory, (3) Restatement of all overhead entries using budgeted indirect cost 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 cost rates rather than actual indirect cost. C) (1) Proration to work in process, finished goods and cost of goods sold, (2) Year-end write-off to cost of goods sold, (3) Restatement of all overhead entries using actual indirect cost rates rather than budgeted indirect cost rates. D) No entry is required to dispose of over or under-under-allocated overhead.

C) (1) Proration to work in process, finished goods and cost of goods sold, (2) Year-end write-off to cost of goods sold, (3) Restatement of all overhead entries using actual indirect cost rates rather than budgeted indirect cost rates.

Identify three major source documents used in job-costing systems. A) accounts receivable aging report, accounts payable aging report,and inventory control report B) genreal journal, general ledger, and trial balance C) job cost record (sheet), materials requisition record, and labor time record D) balance sheet, income statement, and cosh flow statement

C) job cost record (sheet), materials requisition record, and labor time record

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 reason- the longer time period, the less influence of seasonal patterns. B) The denominator reason- the longer the time period, the less the effect of variations in output levels on the allocation of fixed cost. C) Neither A or B. D) Both A and B.

D) Both A and B.

Why might an advertising agency use job costing for an advertising campaign by Pepsi, whereas a bank might use process costing to determine the cost of checking account deposits? A) 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) 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 cost of an advertising campaign by Pepsi. C) Whenever a product or service is unique or distinct, process costing is the most efficient way to assign cost. Therefore since each banking transaction is unique, the banks use process costing to determine the cost of checking account deposits. D) 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.

D) 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.

The two major cost objects that manger focus on in companies using job costing are A) fixed cost and variable costs. B) Cost pool and cost allocation base. C) Direct cost and indirect costs. D) Products or jobs and responsibility centers or departments.

D) Products or jobs and responsibility centers or departments.

A company might use budgeted cost rather than actual cost to compute direct-labor rates because A) the budgeted cost will result in lower corporate income taxes. B) the budgeted cost are more accurate C) the budgeted cost will result in a higher gross margin. D) it may be difficult to trace direct labor cost to jobs as they are completed.

D) it may be difficult to trace direct labor cost to jobs as they are completed.

Modern technology such as Electronic Data Interchange (EDI) is helpful to manages because A) it lowers manufacturing B) it increases product quality C) it increases manufacturing productivity D) it provides them with quick and accurate product-cost information that facilitates the management and control of jobs.

D) it provides them with quick and accurate product-cost information that facilitates the management and control of jobs.

Identify the seven steps in job costing.

Step 1: Identify the job that is the chosen cost object. Step 2: Identify the direct cost of the job. Step 3: Select the cost-allocation bases to use for allocating indirect cost to the job. Step 4: Identify the indirect cost associated with each cost-allocation base. Step 5: Compute the rate per unit of each cost-allocation base used to allocate indirect cost to the Job. Step 6: Compute the indirect cost allocated to the job. Step 7: Compute the total cost of the job by adding all direct and indirect cost assigned to the job.