Chapter 15

Question 1

A cost accounting system includes

Answer 1

Is used to control costs of manufacturing activities

Helps managers determine selling prices

Question 2

True or false
The principle of customization is applicable to both service and manufacturing companies

Answer 2

True

Question 3

True or false
A job costing system requires the company to keep desperate records for each job.

Answer 3

True

Question 4

Choose the products that are most likely to be manufactured as a job, rather than as a job lot

Answer 4

Customized home

Tailored wedding dress

Question 5

Custom orders

Mass production

Answer 5

Custom orders- job order ooerations

Mass production- process ooerations

Question 6

A cost accounting system includes which of the following?

Answer 6

It accumulates production costs and assigns them to products and services.

Question 7

The three types of manufacturing costs in a job order costing system include

Answer 7

Direct labor
Direct materials
Overhead

Question 8

Job order production is most likely used by companies that produce

Answer 8

Customized wedding cakes

Question 9

The correct order of cost flows in a job order costing system is

Answer 9

Work in process-finished goods-cost of goods sold

Question 10

The cost accounting system used when producing customized products is called _______ order production.

Answer 10

Job order

Question 11

Job cost sheets could be used to

Answer 11

Provide a record for the cost of goods sold account

Monitor costs incurred and to predict costs for each job

Provide a subsidiary ledger for the Finished goods inventory account

Question 12

A job which involves producing more than one unit of a custom product is called a

Answer 12

Job lot

Question 13

After jobs are completed and delivered to customers, the job cost sheets is used to provide a permanent record for

Answer 13

Cost of goods sold

Question 14

All of the following are manufacturing costs except

Answer 14

Office salaries

Question 15

List the following documents in the order that they are used when recording indirect materials costs in job order ckst accounting, with the first document on top.

Answer 15

Receiving reports
Materials ledger cards
Materials requisition
Factory overhead ledger

Question 16

All of the following are inventory accounts for a manufacturer except

Answer 16

Indirect materials inventory

Question 17

Receiving reports are used in job order costing to record the cost and quantity of materials

Answer 17

Delivered from suppliers

Question 18

Companies use job cost sheets to track the costs of

Answer 18

Materials, labors, and overhead costs of a job

Question 19

During production job cost sheets represent

Answer 19

The balance in the work in process inventory account

Question 20

The journal entry to record the purchase of materials on account is

Answer 20

Increase in assets and an increase in liabilities

Question 21

Requisitionls are used in job order costing to record the cost and quantity of

Answer 21

Both direct and indirect materials requested by the production department

Question 22

Job cost sheets can be used to

Answer 22

Provide a record for the cost of goods sold account

Monitor costs incurred and to predict costs for each job

Provide a subsidiary ledger for the Finished goods inventory account

Question 23

Journal entries for materials used in production are posted to

Answer 23

General ledger accounts
Subsidiary records

Question 24

After jobs are completed and delivered to customers the job cost sheet is used to produce a permanent record for

Answer 24

Cost of goods sold

Question 25

Time tickets are used in job order costing to record the time and cost of

Answer 25

Both direct and indirect labor in the production department

Question 26

The journal entry to record the purchase of materials on account is to

Answer 26

Debit raw materials inventory and credit accounts payable

Question 27

The recording of direct labor will result in a

Answer 27

Debit to work in process inventory and credit to factory wages payable

Question 28

The journal entry to record the use of direct materials in production is

Answer 28

Increase in one asset and decrease in another asset

Question 29

Time tickets are used in job order costing to

Answer 29

Report hours worked on specific jobs during the payroll period

Question 30

Managers use a predetermined overhead rate for which of the following reasons

Answer 30

To assist in setting prices for jobs To estimate total job costs before the job is completed

Question 31

The journal entry to record the purchase of materials on account is an

Answer 31

Increase in assets and and increase in liabilities

Question 32

The predetermined overhead rate is based on total ______ costs and activity base.

Answer 32

Overhead

Question 33

The journal entry to record direct labor in production is to

Answer 33

Debit work in process inventory and credit factory wages payable

Question 34

True or false Materials requisitioned for use on a specific job are always considered to be direct materials

Answer 34

False

Question 35

Manufacturing costs include direct materials direct labor and

Answer 35

Applied overhead costs

Question 36

Overhead may be applied based on

Answer 36

Direct labor Machine hours

Question 37

The journal entry to record the allocation of factory overhead to work in process is

Answer 37

Debit work in process and credit factory overhead

Question 38

True or false Journal entries are not required when direct materials are requisitioned

Answer 38

False

Question 39

The journal entry to record indirect materials cost used in production bincludes a debit to factory ____

Answer 39

Overhead

Question 40

The base to which overhead costs are linked such as direct labor or machine hours, is known as the overhead_____ base

Answer 40

Overhead activity base

Question 41

The journal entry to record indirect labor used in production is to

Answer 41

Debit factory overhead and credit factory wages payable

Question 42

The journal entry to record depreciation on factory equipment is to

Answer 42

Debit factory overhead and credit accumulated depreciation-equipment

Question 43

True or false Factory overhead includes direct materials and direct labor

Answer 43

False

Question 44

The journal entry to record the use of indirect materials in production is to

Answer 44

Debit factory overhead and credit raw materials inventory

Question 45

A schedule of cost of goods manufactured included all of the following costs

Answer 45

Factory overhead applied Work in process inventory Direct labor used Direct materials used

Question 46

If the factory overhead is over applied then

Answer 46

The factory overhead account has a credit balance Applied overhead costs>actual overhead costs.

Question 47

The journal entry to record the accrual of factory utilities is to

Answer 47

Debit factory overhead and credit utilities payable

Question 48

One important difference between service companies and manufacturing companies is that

Answer 48

Service companies do not have raw materials inventory

Question 49

A schedule of cost of goods manufactured included all of the following costs

Answer 49

Direct labor used Factory overhead applied Work in process inventory Direct materials used

Question 50

The factory overhead account is (debited/credited) for applied overhead costs

Answer 50

Credited

Question 51

A company incurs factory overhead costs of 1200 and applied 1500 if the difference is considered immaterial then the ____

Answer 51

Factory overhead account has a credit balance of 300 before adjusting Adjusting entry will require a credit to cost of goods sold

Question 52

At the end of the accounting period a company's overhead was under applied by 150 if not adjusted how does this affect net income?

Answer 52

Net income will be overstated by $150

Question 53

Both service companies and manufacturing companies have

Answer 53

Direct labor Overhead

Question 54

A schedule of cost of goods manufactured included all of the following except

Answer 54

Cost of goods sold

Question 55

If the factory overhead account is under applied then the adjusting journal entry to close the factory overhead account includes a

Answer 55

Debit to cost of goods sold Credit to factory overhead