Chapter 4

Question 1

Name the 3 main characteristics of a costing method.

Answer 1

The cost accumulation method
The cost measurement method
The overhead application method

Question 2

Name the 2 types of cost accumulation methods.

Answer 2

Job costing

Process costing

Question 3

Name the 3 types of cost measurement methods.

Answer 3

Actual
Normal
Standard

Question 4

Name the 2 types of overhead application methods.

Answer 4

Value-based

Activity-based

Question 5

Manufacturing operations whose conversion activities are very similar across several product lines, but whose direct materials used in the various products differ significantly, use _____ costing, a hybrid costing system.

Answer 5

Operation

Question 6

Name the 2 types of spoilage.

Answer 6

Normal

Abnormal

Question 7

Name the 2 types of normal spoilage.

Answer 7

Specific Normal Spoilage

Common Normal Spoilage

Question 8

Normal spoilage which is particular to a given job and is not due to factors related to other jobs.

Answer 8

Specific Normal Spoilage

Question 9

Normal spoilage which is due to factors that affect two or more jobs.

Answer 9

Common Normal Spoilage

Question 10

Name the cost accumulation, cost measurement, and overhead application methods most likely to be used by a cost leadership firm.

Answer 10

Process
Standard
Activity-Based

Question 11

A ____ costing system is appropriate when most costs incurred for the job can be readily identified with a specific product, batch of products, customer order, contract, or project.

Answer 11

Job

Question 12

A ____ costing system is likely to be found in a firm that primarily produces a limited variety of homogeneous products or services.

Answer 12

Process

Question 13

A(n) ____ costing system uses actual costs for DM, DL, and FOH.

Answer 13

Actual

Question 14

A(n) ____ costing system uses actual costs for DM and DL and estimated costs for FOH.

Answer 14

Normal

Question 15

A(n) ____ costing system uses standard costs for DM, DL, and FOH.

Answer 15

Standard

Question 16

Name the 3 types of errors in overhead application.

Answer 16

Aggregation Error
Specification Error
Measurement Error

Question 17

The overhead costing error that arises when a single plantwide rate is used instead of departmental rates, when department rates would yield more accurate cost information.

Answer 17

Aggregation Error

Question 18

The overhead costing error that arises when the wrong cost driver is used in the application rate.

Answer 18

Specification Error

Question 19

The overhead costing error that arises when the amounts used for estimated cost drivers or estimated overhead are incorrect.

Answer 19

Measurement Error

Question 20

Waste in excess of what is expected to occur under normal operating conditions.

Answer 20

Abnormal Spoilage

Question 21

The process of accumulating, classifying, and assigning direct materials, direct labor, and overhead costs to products, services, or projects.

Answer 21

Costing

Question 22

A cost sheet that records and summarizes the costs of direct materials, direct labor, and overhead for a particular job.

Answer 22

Job Cost Sheet

Question 23

An unacceptable unit that occurs under efficient operating conditions; spoilage that is inherent in the manufacturing process.

Answer 23

Normal Spoilage

Question 24

A hybrid costing system that used job costing to assign direct materials costs to jobs and process costing to assign conversion costs to products or services.

Answer 24

Operation Costing

Question 25

The additional work that must be done to make a nonconforming good acceptable so that it can be sold in regular channels.

Answer 25

Rework

Question 26

Materials left over from the manufacture of a product that have little or no value.

Answer 26

Scrap

Question 27

An unacceptable unit that is discarded or sold for disposal value.

Answer 27

Spoilage

Question 28

A sheet showing the time an employee worked on each job, the pay rate, and the total cost chargeable to each job.

Answer 28

Time Ticket

Question 29

Normal spoilage that is specific to a job is charged to _____ .

Answer 29

The specific job so the cost of the spoilage is spread over the cost of the good units in that job.

Question 30

Normal spoilage that is common to two or more jobs is charge to ____ .

Answer 30

Factory overhead so it affects the costs of all jobs.

Question 31

When scrap for a specific job is sold for cash, the amount received is debited / credited to this account.

Answer 31

Credited to Work-in-Process

Question 32

When scrap common to all jobs is sold for cash, the amount received is debited / credited to this account.

Answer 32

Credited to Factory Overhead

Question 33

True or False

Cost of rework is treated in the same way as cost of spoiled units.

Answer 33

True