Chapter 17

A cost accounting system that accumulates costs for each manufacturing department or process is called a

process cost system.
client cost system.
job order cost system.
department cost system.

process cost system.

The purpose of a cost accounting system is to

determine taxes to be paid.
measure, record, and report product costs.
determine the accuracy of the financial statements.
determine how much each customer will be billed for shipping on purchases.

measure, record, and report product costs.

A job order will be used by which of the following manufacturing companies?

custom limousine factory
candy factory
pencil factory
paper towel factory

custom limousine factory

During July, the Jamal Company incurred factory overhead as follows: utilities, $6,500; accumulated depreciation, $2,500; and indirect salaries, $3,600. Which of the following journal entries is correct?

Factory Overhead, $12,600 Dr.; Utilities Payable, $6,500 Cr.; Accumulated Depreciation, $2,500 Cr.; Wages Payable, $3,600 Cr.

Factory Overhead, $12,600 Dr.; Utilities Payable, $6,500 Cr.; Accumulated Depreciation, $2,500 Cr.; Wages Payable, $3,600 Cr.

The estimated budget for factory overhead is $90,000 and the estimated direct labor hours is 9,000. Actual factory overhead is $99,000. What is the predetermined overhead rate?

$0.10
$10
$0.11
$11

$10

Joelle Company accumulated 530 hours of direct labor costs on Job 233 and 615 hours on Job 234. The total direct labor was incurred at a rate of $20 per direct labor hour. Which of the following journal entries is correct?

Wages Payable $22,900 Dr. and Work in Process $22,900 Cr.
Direct Labor $22,900 Dr. and Wages Payable $22,900 Cr.
Factory Overhead $22,900 Dr. and Wages Expense $22,900 Cr.
Work in Process $22,900 Dr. and Wages Payable $22,900 Cr.

Work in Process $22,900 Dr. and Wages Payable $22,900 Cr

In a job order costing system, ____________ make up the work in process ledger.

materials requisitions
job cost sheets
None of these choices are correct.
receiving reports

job cost sheets

Job cost sheets can be used for

determining quality issues.
determining profits.
All of these choices are correct.
determining the accuracy of job quotes.

All of these choices are correct.

A job order costing system can be used to
reconcile bank records

with book records.
control costs.
estimate factory overhead costs.
determine period costs.

control costs.

A job order cost system can be used by a hospital to

evaluate a patient’s progress.
charge patients with services provided.
establish security policies.
evaluate quality care.

charge patients with services provided.

The job order cost system for a service business includes all of the following except

materials inventory.
work in process.
overhead.
cost of services.

materials inventory.

In service companies, _________ is supported by a cost ledger with a job cost sheet for each client.

Cost of Services
Work in Process
None of these choices are correct.
cash received for a service

Work in Process

A law firm, Morris & Morris, accumulates costs associated with individual cases using a job order cost system. On August 5, the firm charged 200 hours of professional (lawyer) time to the Micro Systems Co. breech of contract suit to prepare for the trial, at a rate of $340 per hour. What is the journal entry for this transaction?

Debit Work in Process and credit Salaries Payable for $68,000.

Debit Work in Process and credit Salaries Payable for $68,000.

A process cost system will be used by all of the following manufacturing companies except

an oil refinery.
a custom sailboat factory.
an ice cream factory.
a pencil factory.

a custom sailboat factory.

A job order will be used by which of the following manufacturing companies?

candy factory
pencil factory
custom limousine factory
paper towel factory

custom limousine factory

Which of the following is the flow of manufacturing costs?

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

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

Joelle Company accumulated 530 hours of direct labor costs on Job 233 and 615 hours on Job 234. The total direct labor was incurred at a rate of $20 per direct labor hour. Which of the following journal entries is correct?

Direct Labor $22,900 Dr. and Wages Payable $22,900 Cr.
Factory Overhead $22,900 Dr. and Wages Expense $22,900 Cr.
Wages Payable $22,900 Dr. and Work in Process $22,900 Cr.
Work in Process $22,900 Dr. and Wages Payable $22,900 Cr.

Work in Process $22,900 Dr. and Wages Payable $22,900 Cr.

Job cost sheets can be used for

determining profits.
All of these choices are correct.
determining quality issues.
determining the accuracy of job quotes.

All of these choices are correct.

A baking company has determined that direct material costs are increasing. All of the following are reasons why this may be true except

the oven is malfunctioning.
the fruits used in baking are out of season.
cakes are being sold at a special rate during the month.
a new baker has been hired who is not familiar with the ingredients.

cakes are being sold at a special rate during the month.

The job order cost system for a service business includes all of the following except

work in process.
overhead.
materials inventory.
cost of services.

materials inventory.