A process cost accounting system accumulates costs for each of the departments or processes within the factory. True False 6. A process cost accounting system is best used by manufacturers of like units of product that are not didst negligible from each other during a contain souse production process. CT rue False 7. The process cost system is appropriate where few products are manufactured and each product is made to customers’ specifications. True False 8. A job order cost system would be appropriate for a crude oil refining business. True False 9.
A law firm would use a job order cost system to accumulate all of the costs associated with a particular client engagement, such as lawyer time, copying charges, filing fees, and overhead. Citrus False 10. The job order costing system is not used by service organizations. True False 11. The job order costing system is used by service firms to determine revenues, expenses, and ultimately profit. C] True False 12. Perpetual inventory controlling accounts and subsidiary ledgers are maintained for materials, work in process, and finished goods in cost accounting systems. C]True False 13.
When the goods are sold, their costs are transferred from Work in Process to Finished Goods. [l True False 14. The materials requisition serves as the source document for debiting the accounts in the materials ledger. C] True False 15. Materials are transferred from the storeroom to the factory in response to materials requisitions. True False 16. The document that serves as the basis for recording direct labor on a job cost sheet is the time card. Citrus False 17. The document that serves as the basis for recording direct labor on a job cost sheet is the time ticket.
True False 18. Depreciation expense on factory equipment is part of factory overhead cost. True False 19. Factory overhead is applied to production using a predetermined overhead rate. C]True False 20. If factory overhead applied exceeds the actual costs, the factory overhead account will have a credit balance. Couture False 21 . If factory overhead applied exceeds the actual costs, overhead is said to be underplayed. True False 22. If the underplayed factory overhead amount is material, it is transferred to Cost of Goods Sold at the end of the fiscal year. њTrue False 23.
Fifth underplayed factory overhead amount is immaterial, it is transferred to Cost of Goods Sold at the end of the fiscal year. C]True False 24. Each account in the cost ledger in a job order system is called a job cost whet. Citrus False 25. In the job order system, the finished goods account is the controlling account for the factory overhead ledger. True False 26. The inventory accounts generally maintained by a manufacturing firm are only finished goods and materials. C]True False 27. Generally accepted accounting principles require companies to use only one factory overhead rate for product costing.
True F-ales 28. Interim financial statements for a manufacturing business would report oversupplied factory overhead as a deferred item on the balance 29. The debit to factory overhead for the cost of indirect materials is obtained room the summary of the materials requisitions. Citrus False 30. In a factory with several processing departments, a single factory overhead rate may not provide accurate product costs and effective cost control. 0 True False 31 . Manufacturing costs are generally classified into two categories: selling and administrative. 0 True False 32.
The current year’s advertising costs are normally considered period costs. True False 33. Direct labor cost is an example of a period cost. D True False 34. A manufacturing business reports just two types of inventory on its balance sheet: work in process inventory and finished goods inventory. Citrus False 35. On the balance sheet for a manufacturing business, the cost of direct materials, direct labor, and factory overhead, which have entered into the manufacturing process but are associated with products that have not been finished, is reported as direct materials inventory.
True False 36. As product costs are incurred in the manufacturing process, they are accounted for as assets and reported on the balance sheet as inventory’. 0 True False A receiving report is prepared when purchased materials are first received by the manufacturing department. LIT rue False Period costs are costs that are incurred for the production requirements of a certain period. C]True False Job order cost systems can be used to compare unit costs of similar jobs to determine if costs are staying within expected ranges.
True False Job cost sheets can provide information to managers on unit cost trends, the cost impact of continuous improvement in the manufacturing process, the cost impact of materials changes, and the cost impact of direct materials price or direct labor rate changes over time. C True False Job order cost accounting systems may be used to evaluate a company’s efficiency. True False Information about costs developed through a job order cost system can not be used to evaluate an organization’s cost performance. True False A staff department or unit is one directly involved in the basic objective of the organization. True False Job order cost accounting systems may be used for planning and controlling a service business. 0 True False Job order cost accounting systems can be used only for companies that manufacture a product. Citrus False The direct labor and overhead costs of providing services to clients are accumulated in a work-in-process account. True False In a job order cost accounting system for a service business, materials costs are normally included as part of overhead. True False A service organization will not use the job order costing method because it has no direct materials.
True False Using the job order cost system, service organizations are TABLE to bill customers on a weekly or monthly basis, even when the job has not been completed. CT rue False Match each of the following terms with the phrase that most closely describes it. Each answer may be used only once. D 1 . Typically used by companies that make custom products. Underplayed overhead 2. Applied overhead is less than actual overhead incurred. Period costs 3. Typically used by companies whose products are indistinguishTABLE from each other. Oversupplied overhead 4. Expenses of the current period.
Job order cost system 5. The stock ledger. Process cost system 6. Applied overhead is more than actual overhead incurred. Goods ledger Finished describes it. Each answer may be used only once. 1. Serves as the basis for recording direct labor on a job cost sheet. Cost of Services 2. Service providers use this account similarly to the cost of merchandise sold account used by merchandisers. Job cost sheets . Subsidiary ledger for Work in Process. Time tickets 4. Prepared when materials that have been ordered are received and inspected. Receiving report 5. Serves as the basis for recording materials used.
Material requisition Which of the following are the two main types of cost accounting systems for manufacturing operations? CA. Process cost and general accounting systems. Job order cost and process cost systems BLOC. Job order and general accounting systems]D. Process cost and replacement cost systems Which of the following would most likely use a job order costing system? DAD. A paper milled. A swimming pool installer A company that manufactures chlorine for swimming pools]D. An oil refinery Which of the following would be most likely to use process costing? CIA. A custom furniture manufacturer.
C]B. An auto body repair shop. ClC. A law firmed. A lawn fertilizer manufacturer. D Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory? DAD. Job order cost system DAB. General cost systemic. Replacement cost system[AD. Process cost system For which of the following businesses would the job order cost system be appropriate? CA. Meat processor. Automobile manufactured. Oil refinery. Construction contractor D For which of the following businesses would the process cost system be appropriate? DAD.
Book retailer[B. Dress designer. Lumber mill COD. Printing firm Which of the following is not a characteristic of a job order costing system? CIA. It accumulates cost for each department within the factory. BOB. It provides a separate record for the cost of each quantity of product that passes through the factory. C]C. It is best suited for industries that manufactures custom goods. C]D. Uses only one work in process account. Which of the following products probably would be manufactured using a job order costing system? DAD. Number 2 pencils[B. Computer monitors. C]C. Wedding invitations. COD. Paper.
Job order costing and process costing are DAD. Pricing systems. B. Cost accounting systems. BAD. Cost flow systems. [AD. Inventory tracking systems. Which of the following is not true about why a service firm will use the job order costing system? DAD. To help control costsњB. To determine client billings]C. To determine department costs within the firm COD. To determine profit Which of the following costs are NOT included in finished goods inventory? DAD. Direct labor]B. Factory overhead. Company president’s salary COD. Direct materials Which of the following is the correct flow Of manufacturing costs?
DAD. Raw materials, work in process, finished goods, cost of goods sold AL]B. Raw materials, finished goods, cost of goods sold, work in process. C. Work in process, finished goods, raw materials, cost of goods sold AD. Cost of goods sold, raw materials, work in process, finished goods. Which of the following would record the labor costs to an individual job? CIA. Clock caracal. In-and-out cards. Time tickets COD. Payroll register The Thomson Company forecasts that total overhead for the current year will be and that total machine hours will be 200,000 hours.
Year to date, the actual overhead is $1 5,500,000 and the actual machine hours are 220,000 hours. If the Thomson Company uses a predetermined overhead rate based on machine hours for applying overhead, what is that overhead rate? DAD. $71 per machine hour. $78 per machine hour]C. $68 per machine hour. $75 per machine hour d date, the actual overhead is and the actual machine hours are based on machine hours for applying overhead, as of this point in time (year to date) the overhead is over/under applied by? 1. 000,000 over acid. $1 undergo. $500,000 overdo. 500,000 under At the end of the year, overhead applied was $35,000,000. Actual overhead was $34,200,000. Closing over/under applied overhead into cost of goods sold would cause net income to increase/decrease by? CA. Increase by $800,000 Decrease by $800,000јc. Not effect net income. CD. Decrease net income by $200,000 Which of the following would most likely be a period cost? CIA. Depreciation on factory lunchroom furniture. Club. Salary of telephone receptionist in the sales office. Bloc. Salary of a security guard for the factory parking lot. Cold. Computer chips used by a computer manufacturer.