Ch. 19 MC

For which of the following businesses would the process cost system be appropriate?
1)
a custom cabinet maker

2)
a landscaper

3)
a paper mill

4)
a catering firm

Paper Mill

Which of the following is not a reason a service firm would use a job order costing system?

1)
to determine profit

2)
to determine department costs within the firm

3)
to determine client billing

4)
to help control costs

to determine department costs within the firm

Which of the following are the two main types of cost accounting systems for manufacturing operations?

job order cost and process cost systems

Which of the following would most likely use a job order costing system?

1)
a paper mill

2)
a company that manufactures chlorine for swimming pools

3)
a swimming pool installer

4)
an oil refinery

Swimming pool installer

Which of the following products would be manufactured using a job order costing system?

1)
a graduation invitation

2)
a highlighter pen

3)
a cell phone

4)
a recliner

a graduation invitation

Which of the following would be most likely to use process costing?

1)
a law firm

2)
an auto body repair shop

3)
a lawn fertilizer manufacturer

4)
a custom furniture manufacturer

A lawn fertilizer manufacturer

Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory?

job order cost system

Job order costing and process costing are

cost accounting systems

Which of the following costs are not included in finished goods inventory?

1)
direct materials

2)
direct labor

3)
factory overhead

4)
chief financial officer’s salary

chief financial officer’s salary

Costs that are incurred in generating revenues during the period, but are not involved in the manufacturing process are referred to as

period costs

The entries to record cost and sale of a finished good on account is

debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, credit Sales

Each document in the cost ledger is called a

job cost sheet

The amount of time spent by an employee on an individual job are recorded on

time tickets

For a manufacturing business, products that are in the process of being manufactured are referred to as

work in process inventory

Which of the following is the correct flow of manufacturing costs?

1)
raw materials, finished goods, cost of goods sold, work in process

2)
raw materials, work in process, finished goods, cost of goods sold

3)
work in process, finished goods, raw materials, cost of goods sold

4)
cost of goods sold, raw materials, work in process, finished goods

raw materials, work in process, finished goods, cost of goods sold

The document authorizing the issuance of materials from the storeroom is a

materials requisition

The journal entry to record the purchase of $45,000 of raw materials is

Materials 45,000 Accounts Payable 45,000

The basis for recording direct and indirect labor costs incurred is a summary of the period’s

time tickets

Costs that are treated as assets until the product is sold are

product costs

All of the following are examples of activity bases except

1)
salaries of supervisors

2)
raw materials storage

3)
number of machine setups

4)
quality inspections of products

Salaries of supervisors

At the end of the fiscal year, the balance in Factory Overhead is small. The balance would be

transferred to Cost of Goods Sold

The details concerning the costs incurred on each job order are accumulated in a work in process account and supported by a

cost ledger

A widely used activity base for developing factory overhead rates in highly automated settings is

machine hours

The period costs of a textbook printer would include

CEO salary expense

A separate account for each material is found in a

materials ledger

In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a

receiving report

Period costs are
1)
not involved in the production process

2)
classified as direct labor, direct material, or factory overhead

3)
found on the balance sheet

4)
found on the job order cost sheets

not involved in the production process

The amount of time spent by an employee in the factory is usually recorded on

time tickets

The controlling account for the cost ledger is

Work in Process

The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had production costs of $375,000. The entry to record the transfer of costs from finished goods to cost of goods sold is

Cost of Goods Sold 375,000 Finished Goods 375,000

Recording jobs shipped and customers billed would include a credit to

Finished Goods

Bar code scanners are now being used to track incoming materials and to electronically transmit this data. Scanners have replaced which of the following?

receiving report

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual manufacturing overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the predetermined overhead rate per direct labor hour?

$12.00

The Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours. The machine hours for the month of April for all of the jobs were 4,780. If the actual factory overhead totaled $141,800, determine the over- or underapplied amount for the month.

$7,575 overapplied

Aspen Technologies has the following budget data:

Estimated direct labor hours
15,000
Estimated direct labor dollars
$90,000
Estimated factory overhead costs
$198,00

If factory overhead is to be applied based on direct labor hours, the predetermined overhead rate is

$13.20

If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a

debit balance and be underapplied

Sanders Inc. has applied $567,988 of overhead to jobs in the cost ledger. Actual overhead at the end of the year is $575,000. The adjustment for over or underapplied overhead is

$7,012 underapplied, increase Cost of Goods Sold

Recording jobs shipped and customers billed would include a debit to

Cost of Goods Sold

The entry to record the flow of direct labor costs into production in a job order cost accounting system is to

debit Work in Process, credit Wages Payable

Which of the following is the formula to calculate the predetermined factory overhead rate?
1)
actual total factory overhead costs divided by actual activity base

2)
estimated total factory overhead costs divided by actual activity base

3)
actual total factory overhead costs divided by estimated activity base

4)
estimated total factory overhead costs divided by estimated activity base

estimated total factory overhead costs divided by estimated activity base

Which of the following is a product cost?

1)
drill bits for a drill press used in the plant assembly area

2)
advertising for a particular product

3)
salary of a sales manager

4)
salary of the company receptionist

drill bits for a drill press used in the plant assembly area

The following budget data are available for Sharp Company:

Estimated direct labor hours
12,000
Estimated direct labor dollars
$90,000
Estimated factory overhead costs
$180,000
Actual direct labor hours
11,500
Actual direct labor dollars
$92,000
Actual factory overhead costs
$181,000

If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is

$172,500 Est. FO costs/Est. DL Hrs. ^answer * Actual DL hours

The recording of the application of factory overhead costs to jobs would include a credit to

Factory Overhead

The finished goods account is the controlling account for the

stock ledger

The recording of the factory labor incurred for general factory use would include a debit to

Factory Overhead

In a job order cost accounting system, the entry to record the flow of direct materials into production is to

debit Work in Process, credit Materials

The source document for the data for debiting Work in Process for direct materials is a

materials requisition

Which of the following would record the labor costs to an individual job?

time tickets

Which of the following represents the factory overhead applied to a product?

predetermined factory overhead rate times actual activity base

During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use. In addition, factory overhead charged to production was $32,000. The entry to record the direct labor costs is

WIP 150,000 Wages Payable 150,000

The materials requisition is used to

release materials from the storeroom to the factory

Recording jobs completed would include a credit to

Work in Process

At the end of July, the first month of the current fiscal year, the factory overhead account had a debit balance. Which of the following describes the nature of this balance and how it would be reported on the interim balance sheet?

underapplied, deferred debit

All of the following are true regarding product costs except
​
1)
product costs are found on the balance sheet until they are sold

2)
product costs consist of direct labor, direct materials, and factory overhead

3)
product costs include sales and administrative expenses

4)
product costs can be found in three accounts on the balance sheet

product costs include sales and administrative expenses

During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use. Factory overhead applied to production was $32,000. The entry to record the actual factory overhead costs incurred is

FO 25,000 Wages Payable 25,000

The recording of the jobs completed would include a debit to

Finished Goods

Which of the following is a period cost?

1)
salary of a security guard for the factory parking lot

2)
depreciation on factory lunchroom furniture

3)
salary of telephone receptionist in the sales office

4)
computer chips used by a computer manufacturer

salary of telephone receptionist in the sales office

Period costs are classified as either

selling expenses or administrative expenses

A difference in quantity of materials used on two comparable jobs may be caused by

1)
inadequately trained employees

2)
poor quality materials

3)
employee carelessness

4)
all of these

All of these

Job cost sheets can provide information to managers for all except

utilities, managerial salaries, and depreciation of computers in the corporate office

In a job order cost accounting system used by a service business, which of the following items would normally not be included as part of overhead?
1)
rent

2)
materials

3)
direct labor

4)
supplies

Direct Labor

The direct labor and overhead costs of providing services to clients are accumulated in

work in process

Which of the following entries would not be found on the books of a service provider?
1)
a debit to Work in Process; and a credit to Wages Payable

2)
a debit to Work in Process; and a credit to Materials

3)
a debit to Work in Process; and a credit to Overhead

4)
a debit to Cost of Services; and a credit to Work in Process

a debit to Work in Process; and a credit to Materials

Which of the following would not be found in the accounting system of a service provider?
Question options:

1)
job cost sheets

2)
cost ledger

3)
finished goods ledger

4)
deferred revenue account

finished goods ledger

When a job is completed in a service organization, the job costs are transferred to the

cost of services account