Cost Management A Strategic Emphasis 6th
Edition by Blocher Stout Juras Cokins ISBN
0078025532 9780078025532
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Chapter 04
Job Costing
Multiple Choice Questions
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
1. Product costing provides useful cost information for all the following except:
A. Both manufacturing and non-manufacturing firms.
B. For non-manufacturing firms.
C. Management planning, cost control, and performance evaluation
D. Financial statement reporting.
E. Identifying and hiring competent managers.
2. The key distinction between job costing and process costing is:
A. The difference in detail required by each approach.
B. The use made of the collected data.
C. The journal entries required.
D. The cost object for which costs are accumulated.
E. The standards applied.
3. Standard costs are:
A. Planned costs the firm should attain.
B. Associated with direct materials and factory overhead only.
C. Associated with direct labor and factory overhead only.
D. Targeted low costs the firm should strive for.
E. None of the above.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
4. Which of the following can produce unit product costs that fluctuate significantly?
A. Actual costing system.
B. Standard costing system.
C. Normal costing system.
D. Industry costing system.
E. None of the above.
5. A normal costing system uses actual costs for direct materials and direct labor, and:
A. Actual costs for factory overhead.
B. Estimated factory overhead costs based on material cost.
C. Estimated factory overhead costs based on labor cost.
D. Estimated costs for factory overhead.
E. Charges actual factory overhead as a lump sum.
6. Product costing system design or selection:
A. Is cost management expertise.
B. Requires an understanding of the nature of the business.
C. Should provide useful cost information for strategic and operational decision needs.
D. Should be cost effective in design and operation.
E. All the above answers are correct.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
7. If a firm is following the cost leadership strategy, and overhead accounts are complex, then the:
A. Firm should use a process costing system.
B. Firm can use either a project or job costing system.
C. Traditional volume-based job costing will not usually provide the needed cost accuracy.
D. Only recourse is to install a hybrid costing system.
E. Firm should attempt to collect only material and labor costs.
8. The three major differences between process and job order costing systems are those relating to:
A. Quantity, quality, and cost.
B. Speed, accuracy, and design.
C. Cost object, product or service variety, and timing of unit cost calculation.
D. Responsibility for cost, system design, and authorization codes.
E. None of the above is correct.
9. The two main advantages of using predetermined factory overhead rates are to provide more accurate unit cost information and to:
A. Simplify the accounting process.
B. Provide cost information on a timely basis.
C. Insure transmission of correct data.
D. Extend the useful life of the cost data.
E. Adjust for variances in data sources.
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10. The ideal criterion for choosing an allocation base for overhead is:
A. Ease of calculation.
B. A cause-and-effect relationship.
C. Ease of use.
D. Its preciseness.
E. Its applicability.
11. Volume-based rates are appropriate in situations where the incurrence of factory overhead:
A. Is related to multiple cost drivers.
B. Is related to several non-homogeneous cost drivers.
C. Is related to a single, common cost driver.
D. Varies considerably from period to period.
E. Is relatively small in amount.
12. Departmental rates are appropriate when all the following exist except:
A. Not all products pass through the same processes.
B. Departments are not similar in function.
C. Departments have dissimilar cost drivers.
D. All departments have similar cost drivers and cost usage characteristics.
E. Products consume departmental resources in a significantly different manner.
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13. Volume-based cost accounting systems often do a poor job of product costing because they:
A. Use only volume-based cost drivers.
B. Fail to recognize the impact of overhead in product cost.
C. Often do not reflect changes in major cost categories caused by plant automation.
D. Too often use an allocation base that does not have a cause-effect relationship to resource usage.
E. Product costs involve both fixed and variable costs
14. Under job costing, factory overhead costs are assigned to products or services using labor or machine hours which are:
A. Multiple cost pools.
B. A homogeneous cost pool.
C. Volume-based cost drivers.
D. Non-volume-based cost drivers only.
E. Activity-based cost drivers.
15. Operation costing is a hybrid costing system for products and services that uses:
A. Job costing to assign direct material costs and standard costing for conversion cost.
B. Process costing to assign conversion costs and normal costing for materials cost.
C. Job costing for direct materials costs and process costing for conversion cost.
D. Normal costing for conversion cost and process costing for materials cost.
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16. Cost system design/selection should consider all but which one of the following?
A. Cost/benefit of system design/selection and operation.
B. A firm's strategy and management information needs.
C. Customer needs.
D. Nature of the business, product, or service.
17. Which one of the following documents records and summarizes the costs of direct materials, direct labor, and factory overhead for a particular job?
A. Purchase order.
B. Material requisition form.
C. Job product cost document.
D. Bill of materials.
E. Job cost sheet.
18. Which one of the following is used by the production department supervisor to request the materials for production?
A. Purchase order.
B. Material requisition.
C. Bill of materials.
D. Product job cost schedule.
E. Job cost sheet.
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19. Which one of the following is the amount of factory overhead applied that exceeds the actual factory overhead cost?
A. Factory overhead applied.
B. Actual factory overhead.
C. Overapplied overhead.
D. Allocated factory overhead.
E. Underapplied overhead.
20. Which one of the following is the amount that actual factory overhead exceeds the factory overhead applied?
A. Factory overhead applied.
B. Actual factory overhead.
C. Overapplied overhead.
D. Allocated factory overhead.
E. Underapplied overhead.
21. The total cost of direct materials, direct labor, and factory overhead transferred from the Work-in-Process Inventory account to the Finished Goods Inventory account during an accounting period is:
A. Normal cost of goods sold.
B. Adjusted cost of goods sold.
C. Total manufacturing cost.
D. Cost of goods manufactured.
E. Actual cost of goods sold.
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22. A hybrid costing system that uses job costing to assign direct materials costs, and process costing to assign conversion costs to products or services is:
A. Process costing.
B. Operation costing.
C. Actual costing.
D. Product costing.
E. Job costing.
23. The journal entry required to record factory depreciation includes:
A. A debit to the Cost of Goods Manufactured account.
B. A debit to the Factory Overhead account.
C. A debit to the Depreciation Expense account.
D. A debit to the Accumulated Depreciation account.
E. None of the above.
24. Factory overhead can be over-or under-applied because:
A. Some actual factory overhead cost varies from the expected.
B. Some actual factory overhead costs are incurred unexpectedly.
C. Production volume may vary from expected volume.
D. All of the above.
E. None of the above. (A, B or C)
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25. When completed units are transferred to the warehouse:
A. Cost of Goods Sold account is debited.
B. Cost of Goods Manufactured account is debited.
C. Finished Goods Inventory account is debited.
D. Work-in-Process Inventory account is debited.
E. Finished Goods Inventory account is credited.
26. When completed units are sold:
A. Cost of Goods Sold account is credited.
B. Cost of Goods Manufactured account is credited.
C. Finished Goods Inventory account is credited.
D. Work-in-Process Inventory account is credited.
E. Finished Goods Inventory account is debited.
27. Which of the following industries is more suitable for using a job costing system?
A. Chemical plants.
B. Petroleum product manufacturing.
C. Medical clinics.
D. Cement manufacturing.
E. Food processing.
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28. The system where the cost of a product or service is obtained by assigning costs to masses of similar units in each department and then computing unit cost on an average basis is called
A. A process costing system.
B. A job costing system.
C. An activity-based costing system.
D. An inventory materials control system.
E. None of the above.
29. All of the following items are debited to the Work-in-Process Inventory account except:
A. Cost of the completed goods being transferred out of the plant.
B. Direct labor cost consumed/incurred.
C. Direct materials cost consumed/used.
D. Applied factory overhead cost.
30. Normal spoilage is defined as:
A. Spoilage that occurs under efficient operations.
B. Scrap.
C. Uncontrollable waste as a result of a special production run.
D. Spoilage that arises under inefficient operations.
E. Controllable spoilage.
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31. Abnormal spoilage:
A. Is considered part of good production.
B. Arises under efficient operating conditions.
C. Is controllable in the short run.
D. Is unacceptable spoilage that should not occur under efficient operating conditions.
E. Is part of inventory product cost.
32. For job costing in service industries, overhead costs are usually applied to jobs based on:
A. Factory overhead.
B. Indirect labor.
C. Indirect materials.
D. Direct labor-hours or dollars.
E. Direct materials.
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Badour Inc. is a job-order manufacturer. The company uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours were 114,000 and estimated factory overhead was $695,400. The following information was for September. Job X was completed during September, while Job Y was started but not finished.
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33. The total cost of Job X is:
A. $152,400.
B. $128,200.
C. $151,900.
D. $129,600.
E. $140,800.
34. The total factory overhead applied during September is:
A. $59,300.
B. $57,950.
C. $57,848.
D. $56,120.
E. $57,710.
35. The underapplied or overapplied overhead for September is:
A. $2,750 underapplied.
B. $2,750 overapplied.
C. $920 overapplied.
D. $920 underapplied.
E. $1,450 underapplied.
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Beckner Inc. is a job-order manufacturer. The company uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours are 133,000 and estimated factory overhead is $784,700. The following information is for September. Job X was completed during September, while Job Y was started but not finished.
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36. The total factory overhead applied during September is:
A. $79,300.
B. $57,572.
C. $73,750.
D. $68,120.
E. $51,710.
37. The underapplied or overapplied overhead for September is:
A. $2,350 underapplied.
B. $2,350 overapplied.
C. $950 overapplied.
D. $950 underapplied.
E. $1,450 underapplied.
38. The total ending work-in-process for September is:
A. $68,000
B. $101,000
C. $133,450
D. $157,300
E. $53,400
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39. Cost of goods manufactured for September is:
A. $105,600
B. $157,300
C. $169,400
D. $145,500
E. $210,700
ABC Company listed the following data for the current year:
40. Assuming ABC Company applied overhead based on direct labor hours, the company's predetermined overhead rate for the year is:
A. $43.95 per direct labor hour.
B. $15.50 per direct labor hour.
C. $15.00 per direct labor hour.
D. $14.28 per direct labor hour.
E. $14.00 per direct labor hour.
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41. Assuming ABC applied overhead based on machine hours, the company's predetermined overhead rate for the year is:
A. $43.95 per machine hour.
B. $14.38 per machine hour.
C. $43.50 per machine hour.
D. $14.50 per machine hour.
E. $14.28 per machine hour.
42. If overhead is applied based on direct labor hours, the overapplied/underapplied overhead is:
A. $15,300 underapplied.
B. $15,300 overapplied.
C. $51,600 underapplied.
D. $51,600 overapplied.
E. $-0-
43. If overhead is applied based on machine hours, the overapplied/underapplied overhead is:
A. $15,300 underapplied.
B. $15,300 overapplied.
C. $10,800 underapplied.
D. $10,800 overapplied.
E. $-0-.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
44. The journal entry to dispose of overapplied or underapplied overhead, if overhead is applied based on direct labor hours, would include a credit to:
A. Work-in-Process Inventory.
B. Cost of Goods Sold.
C. Finished Goods Inventory.
D. Factory Overhead Control.
E. Materials Inventory.
Jackson Inc. listed the following data for 2013:
45. Assuming Jackson Inc. applied overhead based on direct labor hours, the firm's predetermined overhead rate for 2013 is:
A. $14.20 per direct labor hour.
B. $14.38 per direct labor hour.
C. $15.24 per direct labor hour.
D. $15.50 per direct labor hour.
E. $15.85 per direct labor hour.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
46. Assuming Jackson Inc. applied overhead based on machine hours, the firm's predetermined overhead rate for 2013 is:
A. $28.42 per machine hour.
B. $32.25 per machine hour.
C. $31.00 per machine hour.
D. $33.50 per machine hour.
E. $37.41 per machine hour.
47. If overhead is applied based on direct labor hours, overapplied/underapplied overhead is:
A. $136,650 overapplied.
B. $136,650 underapplied.
C. $174,775 underapplied.
D. $174,775 overapplied.
E. $-0-
48. If overhead is applied based on machine hours, the overapplied/underapplied overhead is:
A. $20,400 underapplied.
B. $20,400 overapplied.
C. $48,374 underapplied.
D. $48,374 overapplied.
E. $-0-.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Sutherland Company listed the following data for 2013:
49. Assuming Sutherland applied overhead based on direct labor hours, the company's predetermined overhead rate for 2013 is (round to two significant digits):
A. $23.20 per direct labor hour.
B. $23.60 per direct labor hour.
C. $22.24 per direct labor hour.
D. $22.50 per direct labor hour.
E. $22.85 per direct labor hour.
50. Assuming Sutherland applied overhead based on machine hours, the company's predetermined overhead rate for 2013 is (round to two significant digits):
A. $44.00 per machine hour.
B. $41.98 per machine hour.
C. $38.31 per machine hour.
D. $35.90 per machine hour.
E. $41.18 per machine hour.
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51. If overhead is applied based on direct labor hours, the overapplied/underapplied overhead is:
A. $214,376 underapplied.
B. $214,376 overapplied.
C. $256,312 underapplied.
D. $256,312 overapplied.
E. $225,680 underapplied.
52. If overhead is applied based on machine hours, the overapplied/underapplied overhead is:
A. $187,298 underapplied.
B. $187,298 overapplied.
C. $176,358 underapplied.
D. $176,358 overapplied.
E. $-0-
53. In job costing, the job might consist of:
A. a single product.
B. a batch of identical products.
C. a batch of similar products.
D. a single, well-defined project.
E. a single product, a batch of products, or a single well-defined project.
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54. A job in which a quantity of products is ordered by a single customer is more likely to be an example of:
A. the pull method of production.
B. the resource-based method.
C. the push method of production.
D. the lean method of production.
E. none of the above.
55. An good example of a software system(s) that can be used to prepare job cost reports is:
A. Oracle.
B. Microsoft Access.
C. There are a variety of software systems, often designed specifically for a particular industry.
D. Microsoft Excel.
E. None of the above.
56. Job costing in the printing industry often has the following general framework. Job cost equals:
A. direct materials cost plus direct labor plus applied overhead based on machine hours
B. direct materials cost plus conversion costs applied on the basis of labor hours
C. direct materials cost, plus outside purchase costs, plus cost applied on the basis of labor hours.
D. materials purchases, labor incurred and applied overhead based on labor hours.
E. none of the above.
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Randall Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. Factory overhead cost was applied at 125% of direct labor cost. Selected data concerning the past year's operation of the company are presented below.
57. The cost of direct materials used for production is:
A. $351,000.
B. $297,000.
C. $361,000.
D. $306,000.
E. $324,000.
58. The cost of goods manufactured during the year is:
A. $850,000.
B. $348,000.
C. $672,000.
D. $835,000.
E. $811,000.
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59. The total manufacturing costs for the year are:
A. $850,000.
B. $348,000.
C. $867,000.
D. $835,000.
E. $811,000.
60. The cost of goods sold (before adjustment for under or overapplied overhead) is:
A. $850,000.
B. $348,000.
C. $867,000.
D. $835,000.
E. $811,000.
61. The amount of underapplied or overapplied overhead is:
A. $60,000 overapplied.
B. $60,000 underapplied.
C. $10,000 overapplied.
D. $10,000 underapplied.
E. $0.
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Maple Mount Fishery is a canning company in Astoria. The company uses a normal costing system in which factory overhead is applied on the basis of direct labor costs. Budgeted factory overhead for the year was $680,400, and management budgeted $324,000 of direct labor costs. During the year, the company incurred the following actual costs.
The January 1 balances of inventory accounts are shown below.
The December 31 balances of these inventory accounts were ten percent lower.
62. The predetermined factory overhead rate is:
A. 212% of direct labor costs.
B. 215% of direct labor costs.
C. 222% of direct labor costs.
D. 203% of direct labor costs.
E. 210% of direct labor costs.
63. The amount of direct materials purchased during the year is:
A. $391,000.
B. $388,000.
C. $377,000.
D. $380,000.
E. $374,000.
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64. The total manufacturing costs for the year are:
A. $1,332,600.
B. $1,354,700.
C. $1,336,700.
D. $1,373,600.
E. $1,339,300.
65. The cost of goods manufactured during the year is:
A. $1,332,600.
B. $1,354,700.
C. $1,336,700.
D. $1,373,600.
E. $1,339,600.
66. The normal cost of goods sold, before under or overapplied overhead is:
A. $1,332,600.
B. $1,354,700.
C. $1,336,700.
D. $1,373,600.
E. $1,339,300.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
67. The adjusted cost of goods sold, after under-or overapplied overhead, is:
A. $1,332,600.
B. $1,354,700.
C. $1,357,600.
D. $1,373,600.
E. $1,339,300.
ABC Company uses a Materials Inventory account to record both direct and indirect materials. ABC charges direct materials to WIP, while indirect materials are charged to the Factory Overhead account. During the month of April, the company has the following cost information:
68. The amount of direct materials issued is:
A. $110,000.
B. $30,000.
C. $90,000.
D. $80,000.
E. $50,000.
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69. The credit to the materials inventory account for materials used is:
A. $110,000.
B. $30,000.
C. $90,000.
D. $80,000.
E. $50,000.
70. The ending materials inventory cost is:
A. $110,000.
B. $30,000.
C. $90,000.
D. $80,000.
E. $50,000.
71. The debit to Work-in-Process Inventory account for materials is:
A. $110,000.
B. $30,000.
C. $90,000.
D. $80,000.
E. $50.000.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
72. The debit to the Factory Overhead account is:
A. $110,000.
B. $30,000.
C. $90,000.
D. $80,000.
E. $50,000.
73. L & L, CPAs, employs two full-time professional CPAs and five support employees. Budgeted direct salary costs include $160,000 for each CPA. The support employees are considered as indirect costs, and this cost was budgeted for $200,000 though the actual cost was $225,000. Actual salaries were $155,000 for each CPA. Direct and indirect costs are applied on a CPAlabor-hour basis. Total budgeted CPA-labor-hours were 5,000. If a client used 500 laborhours, what are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively?
A. $100; $40.
B. $62; $40.
C. $90; $40.
D. $64; $40.
E. $62; $45.
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Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:
Total direct labor hours budgeted = 2,000 hours.
The following data applies to one of the products completed during the year:
74. If Orange, Inc. uses direct labor hours to assign overhead, the unit product cost for Product X will be:
A. $60.00.
B. $70.00.
C. $80.00.
D. $90.00.
E. $180.00.
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75. If Orange, Inc. uses machine hours to allocate overhead cost, the unit product cost of Product X will be:
A. $60.00.
B. $80.00.
C. $90.00.
D. $110.00.
E. $130.00.
76. If estimated annual factory overhead is $480,000; overhead is applied using direct labor hours; estimated annual direct labor hours are 200,000; actual March factory overhead is $42,000; and actual March direct labor hours are 17,000; then overhead is:
A. $800 overapplied.
B. $200 overapplied.
C. $800 underapplied.
D. $200 underapplied.
E. $1,200 underapplied.
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77. Dye Co. uses a job cost system and predetermines a factory overhead rate based on the amount of expected fixed costs and expected volume. At the conclusion of the fiscal year, overapplied overhead could be explained by which of the following?
A. Option A
B. Option B
C. Option C
D. Option D
78. At the end of a fiscal year, overapplied factory overhead should be:
A. Debited to Cost of Goods sold.
B. Credited to Cost of Goods sold.
C. Debited to Cost of Good Manufactured.
D. None of the above.
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79. C.M. Fly, owner of Falcon Aircraft Co., is preparing the accounting record for the year just ended. During the year, he had projected that the company would produce 300 Falcon Aircraft for its clients with a factory overhead cost of $150,000,000. However, business was better than expected and the company was able to produce 400 aircraft at factory overhead cost of $175,000,000. What is the amount per unit that Falcon Aircraft has over or underapplied factory overhead?
A. $62,500 overapplied.
B. $62,500 underapplied.
C. $125,000 overapplied.
D. $125,000 underapplied.
E. None of the above.
80. Operation costing uses which of the following costing systems?
A. Option A
B. Option B
C. Option C
D. Option D
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81. The following are types of rework except:
A. Rework on normal defective units common to all jobs.
B. Rework on abnormal defective units not falling within the normal range.
C. Rework on normal defective units for a particular job.
D. All of the above are types of rework, with no exception.
82. Depending on the nature of rework being done on a particular unit, the cost can be charged to one of three specific accounts. Which of the following is correct?
A. Abnormal rework is charged to a Loss from Abnormal Rework account.
B. Abnormal rework is charged to the Work-in-Process Inventory account.
C. Normal rework for a particular job is charged to that specific job's Finished Goods Inventory account.
D. Normal rework common to all jobs is charged to the Work-in-Process Inventory account.
E. Normal rework common to all jobs is charged to a Loss from Normal Rework account.
83. Scrap can be classified according to which of the following?
A. Option A
B. Option B
C. Option C
D. Option D
E. None of the above
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84. Which of the following journal entries is correct if scrap is being incurred and sold for all jobs in common in the amount of $600?
85. With the increase in competition over the past several years and the need for additional accuracy in product costing, traditional cost accounting systems have become less common in product costing because
A. They use volume-based cost drivers.
B. They use structural cost drivers.
C. They use executional cost drivers.
D. They use indirect cost drivers.
E. None of the above.
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A.
B.
C.
D.
86. Departmental overhead rates are preferred over plantwide rates when
A. The plant makes a single product.
B. The plant has a complex production process for a small number of products that go through the same production processes.
C. There are a number of different products in the plant which go through the same processes.
D. The products use different amounts of different processes in different departments.
87. Billy Baroo Company uses a job order cost system. The following information was found in the Work-in-Process account for the month of July.
Billy Baroo applies overhead to production at a predetermined rate of 80% based on the direct labor cost. Job #23, the only job still in process at the end of July, has been charged with direct labor of $12,000. Direct material charged to Job #23 was:
A. $22,400
B. $24,000.
C. $27,000.
D. $29,400.
E. $30,400.
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88. The primary focus of job costing in service industries is on:
A. Direct materials.
B. Direct labor.
C. Indirect materials.
D. Supplies.
E. Factory overhead.
89. A time ticket:
A. Shows the time an employee worked on each job, the pay rate, and the total cost chargeable to each job.
B. Shows the time that a department's employees worked on all jobs, the pay rate of each employee, and the total cost chargeable to each job.
C. Shows the time an employee worked on each job and the total cost chargeable to each job only.
D. Shows the time an employee worked on each job only.
E. None of the above.
90. Many firms use which one of the following terms to indicate the use of job costing in service industries?
A. Actual costing.
B. Normal costing.
C. Project costing.
D. Industry costing.
E. Standard costing.
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91. Which of the following is not a method the management accountant must address regarding the costing system?
A. Cost accumulation method.
B. Cost measurement method.
C. Labor decision method.
D. Overhead assignment method.
92. All of the following are examples of companies using job costing systems except:
A. FedEx.
B. Paramount Pictures.
C. Jiffy Lube International.
D. International Paper.
E. A professional service firm.
93. Which of the following methods accurately represents the process below?
A customer orders twenty cases of nails, and the firm then produces the nails.
A. Pull method.
B. Push method.
C. Order method.
D. Overhead assignment method.
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94. Which of the following companies uses process costing systems?
A. Accenture.
B. Coca-Cola.
C. Jiffy Lube International.
D. A professional service firm.
E. All of the above.
95. Which type of firm is most likely to require a very accurate costing system?
A. A firm in a process industry.
B. A firm in a professional services industry.
C. A firm in a competitive environment.
D. A global firm.
96. Which of the following is not a cost element on the job cost sheet?
A. Materials.
B. Labor.
C. Hours.
D. Overhead.
97. The time ticket shows which amount for an employee?
A. The pay rate.
B. Number of hours a manager assigns.
C. Check-in times and check-out times.
D. Overtime costs.
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98. The predetermined factory overhead rate includes:
A. Estimated annual sales.
B. Estimated total amount of cost driver.
C. Estimated total cost.
D. Estimated electricity consumed.
99. Which of the following industries is often suitable for applying operation costing?
A. Electronic equipment.
B. Healthcare.
C. Legal services.
D. Universities.
100.Job costing in service industries uses recording procedures and accounts similar to those illustrated in the chapter except for:
A. Direct labor.
B. Overhead costs.
C. Direct materials.
D. Cost drivers.
Essay Questions
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101.Amy and Jay Golden have worked for five years in a firm specializing in restoration of historical buildings. Amy has focused on interior reconditioning and Jay on architectural and structural design. They have specialized in residential structures for the past two years, and are thinking of forming their own residential restoration firm. They plan to do all the structural and decorative design, and subcontract the actual construction and decorative work. One of their concerns is to have an accounting system in place when they begin their business. You have been asked to assist them by answering the following questions.
Required:
(1) Since we have a very basic service-type firm, can a simple accounting system be developed?
(2) What kinds of information does the accounting system need to collect?
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102.LM Company listed the following data for 2013:
Required:
(1) Assuming KLM applied overhead based on direct labor hours, calculate the company's predetermined overhead rate for 2013.
(2) Assuming KLM applied overhead based on machine hours, calculate the company's predetermined overhead rate for 2013.
(3) If overhead is applied based on direct labor hours, calculate the overapplied/underapplied overhead.
(4) If overhead is applied based on machine hours, calculate the overapplied/underapplied overhead.
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103.Catlett Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. Factory overhead cost was applied at 120% of direct labor cost. Selected data concerning operations of the company are presented below.
Required: Prepare a schedule of cost of goods manufactured and sold.
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104.Which method of accumulating product costs, job costing or process costing, would be more appropriate in each of the following situations:
1. A physicians' clinic
2. A manufacturer of ready-mix cement
3. A custom equipment manufacturing
4. A print shop
5. A chemical manufacturer
6. An automobile repair shop
7. A professional services firm
8. A food processing company
9. A consulting firm
10. An oil refinery
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