Chapter 02
Job-Order Costing
True / False Questions
1. The use of predetermined overhead rates in a job-order cost system
makes it possible to
... [Show More] estimate the total cost of a given job as soon as
production is completed.
True False
2. A job cost sheet is used to accumulate costs charged to a job.
True False
3. The following journal entry would be made to apply overhead cost to jobs
in a job-order costing system:
True False
4. Under a job-order cost system the Work in Process account is debited with
the cost of materials purchased.
True False
5. The process of assigning overhead cost to jobs is known as overhead
application.
True False
6. The cost of a completed job in a job-order costing system typically
consists of the actual direct materials cost of the job, the actual direct
labor cost of the job, and the actual manufacturing overhead cost of the
job.
True False
7. A debit balance in the Manufacturing Overhead account at the end of the
year means that manufacturing overhead is overapplied.
True False
8. Period costs are expensed as incurred, rather than going into the Work in
Process account.
True False
9. Advertising costs should be charged to the Manufacturing Overhead
account.
True False
10 When a job has been completed, the goods are transferred from the
. production department to the finished goods warehouse and the journal
entry would include a credit to Work in Process.
True False
11 Underapplied or overapplied manufacturing overhead represents the
. difference between actual overhead costs and applied overhead costs.
True False
12 Top management salaries should not go into the Manufacturing Overhead
. account.
True False
13 If manufacturing overhead applied exceeds the actual manufacturing
. overhead costs of the period, then manufacturing overhead is
overapplied.
True False
Multiple Choice Questions
14 In computing its predetermined overhead rate, Marple Company
. inadvertently left its indirect labor costs out of the computation. This
oversight will cause:
A. Manufacturing Overhead to be
overapplied.
B. the Cost of Goods Manufactured to be
understated.
C. the debits to the Manufacturing Overhead account to be
understated.
D. the ending balance in Work in Process to be
overstated.
15 Which of the following is the correct formula to compute the
. predetermined overhead rate?
A. Estimated total units in the allocation base divided by estimated total
manufacturing overhead costs.
B. Estimated total manufacturing overhead costs divided by estimated
total units in the allocation base.
C. Actual total manufacturing overhead costs divided by estimated total
units in the allocation base.
D. Estimated total manufacturing overhead costs divided by actual total
units in the allocation base.
16 Which of the following would probably be the least appropriate allocation
. base for allocating overhead in a highly automated manufacturer of
specialty valves?
A. machinehours
B. power
consumption
C. direct laborhours
D. machine
setups
17 What document is used to determine the actual amount of direct labor to
. record on a job cost sheet?
A. time
ticket
B. payroll
register
C. production
order
D. wages payable
account
18 A proper journal entry to close overapplied manufacturing overhead to
. Cost of Goods Sold would be:
A. Option
A
B. Option
B
C. Option
C
D. Option
D
19 In a job-order costing system, direct labor cost is ordinarily debited to:
.
A. Manufacturing
Overhead.
B. Cost of Goods
Sold.
C. Finished
Goods.
D. Work in
Process.
20 In a job-order costing system, the use of direct materials that have been
. previously purchased is recorded as a debit to:
A. Raw Materials
inventory.
B. Work in Process
inventory.
C. Finished Goods
inventory.
D. Manufacturing
Overhead.
21 The journal entry to record the incurrence of indirect labor costs is:
.
A. Option
A
B. Option
B
C. Option
C
D. Option
D
22 Which of the following accounts is debited when direct labor is recorded?
.
A. Work in
process
B. Salaries and wages
expense
C. Salaries and wages
payable
D. Manufacturing
overhead
23 The balance in the Work in Process account equals:
.
A. the balance in the Finished Goods inventory
account.
B. the balance in the Cost of Goods Sold
account.
C. the balances on the job cost sheets of
uncompleted jobs.
D. the balance in the Manufacturing Overhead
account.
24 In a job-order costing system, indirect materials that have been previously
. purchased and that are used in production are recorded as a debit to:
A. Work in Process
inventory.
B. Manufacturing
Overhead.
C. Finished Goods
inventory.
D. Raw Materials
inventory.
25 Martinez Aerospace Company uses a job-order costing system. The direct
. materials for Job #045391 were purchased in July and put into production
in August. The job was not completed by the end of August. At the end of
August, in what account would the direct material cost assigned to Job
#045391 be located?
A. raw materials
inventory
B. work in process
inventory
C. finished goods
inventory
D. cost of goods
manufactured
26 Which terms will make the following statement true? When manufacturing
. overhead is overapplied, the Manufacturing Overhead account has a
balance and applied manufacturing overhead is greater than
manufacturing overhead.
A. debit,
actual
B. credit,
actual
C. debit,
estimated
D. credit,
estimated
27 Overapplied manufacturing overhead occurs when:
.
A. applied overhead exceeds actual
overhead.
B. applied overhead exceeds estimated
overhead.
C. actual overhead exceeds estimated
overhead.
D. budgeted overhead exceeds actual
overhead.
28 Daguio Corporation uses direct labor-hours in its predetermined overhead
. rate. At the beginning of the year, the total estimated manufacturing
overhead was $224,580. At the end of the year, actual direct labor-hours
for the year were 18,200 hours, manufacturing overhead for the year was
underapplied by $12,100, and the actual manufacturing overhead was
$219,580. The predetermined overhead rate for the year must have been
closest to:
A. $11.40 per machinehour
B. $12.34 per machinehour
C. $12.06 per machinehour
D. $10.53 per machinehour
29 Wert Corporation uses a predetermined overhead rate based on direct
. labor cost to apply manufacturing overhead to jobs. Last year, the
company's estimated manufacturing overhead was $1,200,000 and its
estimated level of activity was 50,000 direct labor-hours. The company's
direct labor wage rate is $12 per hour. Actual manufacturing overhead
amounted to $1,240,000, with actual direct labor cost of $650,000. For
the year, manufacturing overhead was:
A. overapplied by
$60,000
B. underapplied by
$60,000
C. overapplied by
$40,000
D. underapplied by
$44,000
30 Crinks Corporation uses direct labor-hours in its predetermined overhead
. rate. At the beginning of the year, the estimated direct labor-hours were
11,200 hours and the total estimated manufacturing overhead was
$259,840. At the end of the year, actual direct labor-hours for the year
were 10,800 hours and the actual manufacturing overhead for the year
was $254,840. Overhead at the end of the year was:
A. $4,280
overapplied
B. $9,280
overapplied
C. $9,280
underapplied
D. $4,280
underapplied
31 At the beginning of the year, manufacturing overhead for the year was
. estimated to be $267,500. At the end of the year, actual direct laborhours for the year were 22,100 hours, the actual manufacturing overhead
for the year was $262,500, and manufacturing overhead for the year was
overapplied by $13,750. If the predetermined overhead rate is based on
direct labor-hours, then the estimated direct labor-hours at the beginning
of the year used in the predetermined overhead rate must have been:
A. 22,100 direct laborhours
B. 19,900 direct laborhours
C. 21,000 direct laborhours
D. 21,400 direct laborhours
32 Brace Corporation uses direct labor-hours in its predetermined overhead
. rate. At the beginning of the year, the estimated direct labor-hours were
21,600 hours. At the end of the year, actual direct labor-hours for the year
were 20,400 hours, the actual manufacturing overhead for the year was
$506,920, and manufacturing overhead for the year was underapplied by
$23,440. The estimated manufacturing overhead at the beginning of the
year used in the predetermined overhead rate must have been:
A. $501,92
0
B. $531,44
5
C. $483,48
0
D. $511,92 [Show Less]