Chapter 2

Question 1

________ measure, record, and report product costs.

Answer 1

cost accounting system

Question 2

keeps track of costs associated with each job

Answer 2

Job order costing

Question 3

Which one of the following companies is most likely to use job order costing?

A) a gold refinery
B) a law firm
C) a surfboard manufacturer
D) a soft drink company

Answer 3

A law firm

Question 4

The flow of costs in a job order costing system ________.

Answer 4

involves accumulating costs and then assigning costs to jobs

Question 5

The costs transferred to Finished Goods Inventory are called ________.

Answer 5

Cost of Goods Manufactured

Question 6

A document that shows the direct materials, direct labor, and manufacturing overhead costs for an individual job is called a ________.

Answer 6

job cost record

Question 7

When a job order costing system is used, depreciation for the factory equipment is debited to ________.

Answer 7

Manufacturing Overhead

Question 8

When a job order costing system is used, actual manufacturing overhead costs are debited to ________.

Answer 8

the Manufacturing Overhead account

Question 9

Which of the following will be categorized as a manufacturing overhead cost?

A) depreciation on factory plant and equipment
B) wages paid to assembly line workers
C) administration charges of showroom
D) cost of direct materials used

Answer 9

depreciation on factory plant and equipment

Question 10

The predetermined overhead allocation rate is calculated by dividing ________.

A) the total estimated overhead costs by total number of days in a year
B) the estimated amount of cost driver by actual total overhead costs
C) the actual overhead costs by actual amount of the cost driver or allocation base
D) the estimated overhead costs by total estimated quantity of the overhead allocation base

Answer 10

D

Question 11

T or F
A cost accounting system will assist a manager in determining how many and which products to produce.

Answer 11

True

Question 12

T or F
Cost accounting systems are primarily concerned with accumulating product cost information.

Answer 12

True

Question 13

T or F
A company starts the job cost record when the job is completed.

Answer 13

False

Question 14

T or F
Actual manufacturing overhead costs are credited to the Manufacturing Overhead account.

Answer 14

False

Question 15

T or F
In a manufacturing operation, depreciation of plant equipment should be debited to the Depreciation Expense account.

Answer 15

False

Question 16

T or F
The amount of taxes and insurance incurred and paid for the plant of a manufacturing company should be debited to the Manufacturing Overhead account.

Answer 16

True

Question 17

T or F
The total amount of manufacturing overhead costs incurred during the period is recorded on the credit side of the Manufacturing Overhead account.

Answer 17

False

Question 18

T or F
The cost of goods manufactured is recorded with a debit to the Finished Goods Inventory account and a credit to the Work-in-Process Inventory account.

Answer 18

True