Managerial Accounting, 4e, Global Edition (Braun/Tietz)

Chapter 3 Job Costing

TRUE/FALSE

2) A food and beverage company like Coca-Cola would most likely use job costing.

3) Process costing is used by companies that produce large numbers of identical units of production in a
continuous fashion.

4) Job costing systems accumulate the costs for each individual job.

5) Companies should always use job costing rather than process costing.

7) Job costing should only be used by manufacturers.

9) Job costing is often used by professional service providers, such as law firms.

10) All manufacturers use either a pure process costing system or a pure job costing system.

11) Companies use job costing when their products or services vary in terms of materials needed, time
required to complete the product, and/or the complexity of the production process.

13) Which product costing system would be better for custom-order products?
A) Product costing system
B) Company costing system
C) Job costing system
D) Overhead costing system

14) A job costing system can be used by which types of companies?

A) Manufacturing and merchandising businesses
B) Service and manufacturing businesses
C) Service, manufacturing, and merchandising businesses
D) Service and merchandising businesses
direct costs.

15) Which product costing system would better account for a unique product?
A) Overhead costing system
B) Job costing system
C) Process costing system
D) Product costing system

16) The two basic types of costing systems are

A) product costing and materials inventory costing.
B) periodic costing and perpetual costing.
C) job costing and process costing.
D) periodic costing and process costing.

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17) Which of the following industries would be most likely to use a job costing system?
A) Chemicals
B) Food and beverage
C) Commercial building construction
D) Pharmaceuticals

20) Which of the following is most likely not to use process costing?
A) DuPont Chemical
B) Exxon-Mobile (gasoline)
C) Ashley Custom Furnishings
D) General Mills (cereal)

24) Job order costing might be used by a

A) candy manufacturer.
B) custom home builder.
C) crude oil refinery.
D) cereal maker.

29) Briefly explain the difference between job order and process costing and give examples of each.

TRUE/FALSE

30) For a manufacturing system, inventory flows from raw materials inventory to work in process
inventory to finished goods inventory.

31) A job cost record is a document that accumulates direct materials costs, direct labor costs and
manufacturing overhead costs assigned to each individual job.

32) At a manufacturing company, inventory flows from work in process inventory, to raw materials
inventory, to finished goods inventory.

33) When raw materials are transferred out of the storeroom to the factory, their cost is transferred out of
raw materials inventory and into work in process inventory.

34) When the products are shipped to customers, the cost of manufacturing those products becomes Cost
of Goods Sold (COGS) shown on the company's balance sheet.

35) A production schedule indicates the quantity and types of inventory that are scheduled to be
manufactured during the period.

36) The bill of materials lists all of the raw materials needed to manufacture the job.

37) A labor time record identifies the employee and the amount of time the employee spent on a
particular job.

38) A production schedule always covers a one-year period of time.

39) A purchase order is used to order needed materials from suppliers.

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42) A ________ is used to accumulate the costs of a job.
A) labor time record
B) materials inventory requisition form
C) bill of materials
D) job cost record

44) Which of these documents informs the storeroom to send specific materials to the factory floor?
A) Receiving report
B) Bill of materials
C) Purchase order
D) Materials requisition

46) The assignment of direct and indirect materials to a cost object reduces the
A) finished goods inventory account.
B) raw materials inventory account.
C) manufacturing overhead account.
D) work in process inventory account.

47) A ________ is a source document used to track employee hours.

A) labor time record
B) process costing
C) job cost record
D) job costing

48) A ________ is used to accumulate all of the direct materials and direct labor used on the job, as well as
the manufacturing overhead allocated to the job.
A) bill of materials
B) job cost record
C) labor time record
D) production schedule

54) An internal request to transfer raw materials requires personnel to complete a

A) materials requisition document.
B) bill of materials document.
C) purchase order document.
D) labor time record document.

56) Payroll-related costs for factory employees who do not work directly on the product are considered
A) direct labor.
B) selling expenses.
C) manufacturing overhead.
D) administrative costs.

61) Manufacturing overhead may include depreciation on the factory plant and equipment, utilities to
run the plant, property taxes and insurance on the plant, and salaries of plant janitors.

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TRUE/FALSE

63) Manufacturing overhead costs cannot be directly traced to jobs.

65) Allocating manufacturing overhead to jobs simply means "splitting up" the total manufacturing
overhead costs among the jobs produced during the year.

70) The predetermined manufacturing overhead rate is calculated by dividing the total estimated
manufacturing overhead costs by the total estimated amount of the allocation base.

71) The predetermined manufacturing overhead rate is calculated by multiplying the total estimated
manufacturing overhead costs by the total estimated amount of the allocation base.

74) The first three steps to allocating manufacturing overhead are taken before the year begins and
include all of the following except
A) estimating total manufacturing overhead costs for the coming year.
B) selecting an allocation base and estimating the total amount that will be used during the year.
C) allocating some manufacturing overhead to each individual job.
D) calculating the predetermined manufacturing overhead rate.

92) Ryan's Paints allocates overhead based on machine hours. Selected data for the most recent year
follow.

Estimated manufacturing overhead cost $235,000

Actual manufacturing overhead cost $244,000
Estimated machine hours 20,000
Actual machine hours 22,500

The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The predetermined manufacturing overhead rate per machine hour is closest to
A) $10.44.
B) $11.75.
C) $10.84.
D) $12.20.

93) Ryan's Paints allocates overhead based on machine hours. Selected data for the most recent year
follow.

Estimated manufacturing overhead cost $235,000

Actual manufacturing overhead cost $244,000
Estimated machine hours 20,000
Actual machine hours 22,500

The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The amount of manufacturing overhead allocated for the year based on machine hours would have been
A) $239,500.
B) $264,375.
C) $235,000.

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D) $244,000.

94) Poland's Paints allocates overhead based on machine hours. Selected data for the most recent year
follow.

Estimated manufacturing overhead cost $238,000

Actual manufacturing overhead cost $244,000
Estimated machine hours 20,000
Actual machine hours 22,500

The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The predetermined manufacturing overhead rate per machine hour is closest to
A) $10.58.
B) $12.20.
C) $10.84.
D) $11.90.

95) Poland's Paints allocates overhead based on machine hours. Selected data for the most recent year
follow.

Estimated manufacturing overhead cost $238,000

Actual manufacturing overhead cost $244,000
Estimated machine hours 20,000
Actual machine hours 22,500

The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The amount of manufacturing overhead allocated for the year based on machine hours would have been
A) $244,000.
B) $238,000.
C) $267,750.
D) $241,000.

110) Job 140 requires $12,000 of direct materials, $6,700 of direct labor, 550 direct labor hours, and 270
machine hours. It also requires 9 hours of inspection at $40 per hour. Manufacturing overhead is
computed at $28 per direct labor hour used and $42 per machine hour used.

The total amount of overhead allocated is

A) $34,100.
B) $26,740.
C) $45,440.
D) $15,400.

122) The following is selected financial data from Turtle Bay Manufacturing for the most recent year.

Ending raw materials inventory $21,000

Ending work in process inventory $44,200
Ending finished goods inventory $53,200
Amount of underallocated manufacturing overhead $5,100
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Cost of goods sold for year $85,000
Cost of raw materials purchased during year $45,300
Cost of direct materials requisitioned during year $43,800
Cost of indirect materials requisitioned during year $7,200
Cost of goods completed during year $120,000
Manufacturing overhead allocated $60,000
Manufacturing overhead % of direct labor cost 120%

What is the beginning raw materials inventory?

A) $19,500
B) $5,700
C) $26,700
D) $72,000

123) The following is selected financial data from Turtle Bay Manufacturing for the most recent year.

Ending raw materials inventory $21,000

Ending work in process inventory $44,200
Ending finished goods inventory $53,200
Amount of underallocated manufacturing overhead $5,100
Cost of goods sold for year $85,000
Cost of raw materials purchased during year $45,300
Cost of direct materials requisitioned during year $43,800
Cost of indirect materials requisitioned during year $7,200
Cost of goods completed during year $120,000
Manufacturing overhead allocated $60,000
Manufacturing overhead % of direct labor cost 120%

What is the beginning work in process inventory?

A) $10,400
B) $65,500
C) $32,200
D) $60,400

124) The following is selected financial data from Turtle Bay Manufacturing for the most recent year.

Ending raw materials inventory $21,000

Ending work in process inventory $44,200
Ending finished goods inventory $53,200
Amount of underallocated manufacturing overhead $5,100
Cost of goods sold for year $85,000
Cost of raw materials purchased during year $45,300
Cost of direct materials requisitioned during year $43,800
Cost of indirect materials requisitioned during year $7,200
Cost of goods completed during year $120,000
Manufacturing overhead allocated $60,000
Manufacturing overhead % of direct labor cost 120%

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What is the beginning finished goods inventory?
A) $138,200
B) $18,200
C) $78,200
D) $(2,800)

125) The following is selected financial data from Turtle Bay Manufacturing for the most recent year.

Ending raw materials inventory $21,000

Ending work in process inventory $44,200
Ending finished goods inventory $53,200
Amount of underallocated manufacturing overhead $5,100
Cost of goods sold for year $85,000
Cost of raw materials purchased during year $45,300
Cost of direct materials requisitioned during year $43,800
Cost of indirect materials requisitioned during year $7,200
Cost of goods completed during year $120,000
Manufacturing overhead allocated $60,000
Manufacturing overhead % of direct labor cost 120%

What is the actual manufacturing overhead?

A) $65,100
B) $54,900
C) $5,100
D) $60,000

TRUE/FALSE

142) Management can use job cost information to help to determine how it will deal with pricing pressure
from competitors.

143) Management can use job cost information to control costs on jobs produced in the future.

144) The total cost of a job shown on the job cost record is the sum of the direct materials and direct labor
traced to the job and the manufacturing overhead allocated to the job.

145) The total cost of a job shown on the job cost record is the sum of the direct materials traced to the job
and the manufacturing overhead allocated to the job.

146) If a job consists of a batch of identical units, managers find the unit cost by dividing the total job cost
by the number of units in the job.

147) The total cost of a job shown on the job cost record is the sum of the direct labor traced to the job and
the manufacturing overhead allocated to the job.

149) The gross profit on the sale of a job is the difference between the sales price and the total unit cost
reported on the job cost record.

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154) The difference between the sales price and the job cost is
A) gross profit.
B) cost of goods sold.
C) net income.
D) operating income.

156) When using cost-plus pricing, the markup is added to the job cost to help
A) cover operating expenses.
B) generate a profit.
C) determine the price to charge for the job.
D) all of the above.

157) Squire Corporation charged Job 110 with $13,400 of direct materials and $11,900 of direct labor.
Allocation for manufacturing overhead is 75% of direct labor costs. What is the total cost of Job 110?
A) $34,225
B) $8,925
C) $41,167
D) $25,300

160) Job 590 has an ending balance of $28,500. It has been charged manufacturing overhead costs of
$7,000. The rate is 70% of direct labor. What was the amount of direct materials charged to the job?
A) $21,500
B) $11,500
C) $26,400
D) $19,950

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