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Multiple Choices - Chp4 - Questions

Chapter 4 of the document focuses on job costing within cost accounting, presenting multiple-choice questions related to various aspects of job order costing, product costing methods, and overhead allocation. It discusses the appropriateness of different costing methods for specific industries and scenarios, as well as the treatment of over-allocated and under-allocated overhead. The chapter emphasizes the importance of accurate budgeting and allocation in manufacturing processes.

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Kadri Ahmad
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10 views3 pages

Multiple Choices - Chp4 - Questions

Chapter 4 of the document focuses on job costing within cost accounting, presenting multiple-choice questions related to various aspects of job order costing, product costing methods, and overhead allocation. It discusses the appropriateness of different costing methods for specific industries and scenarios, as well as the treatment of over-allocated and under-allocated overhead. The chapter emphasizes the importance of accurate budgeting and allocation in manufacturing processes.

Uploaded by

Kadri Ahmad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Chapter 4

Job Costing

Cost Accounting – a
Managerial Emphasis Page 1

Multiple Choice 1
Job order costing is most useful for:
a) Determining inventory valuation using LIFO
b) Estimating the overhead costs included in transfer prices
c) Controlling indirect costs of future production
d) Determining the cost of a specific project

Multiple choice 2
A ship building company employing 30 workers constructs custom built yachts.
Which of the following is an appropriate product costing method for this operation?

a) Process costing
b) Variable cost transfer pricing
c) Job order costing
d) Step down allocation of costs

Multiple choice 3
Operation costing is appropriate for products that are:

a) Unique
b) Produced in batches or production units
c) Homogeneous
d) Related to food and beverage industries

Multiple Choice 4
1. A budgeted rate for allocating manufacturing overhead costs to products is
preferred to an actual rate if the objective is:

a. timeliness but not accuracy.


b. accuracy but not timeliness.
c. both accuracy and timeliness.
d. neither timeliness nor accuracy.

Cost Accounting – a Managerial Emphasis Page 1


Haigazian University
Chapter 4
Job Costing

Cost Accounting – a
Managerial Emphasis Page 2

Multiple choice 5
Avery Co. uses a budgeted manufacturing overhead rate based on machine-hours. For the
month of October, Avery's budgeted overhead was $300,000 based on a budgeted
allocation base of 10,000 machine-hours. Actual overhead incurred amounted to
$325,000 and 11,000 actual machine hours were used. How much was the under-
allocated or over-allocated overhead?
a. $30,000 over-allocated
b. $30,000 under-allocated
c. $5,000 over-allocated
d. $5,000 under-allocated

Multiple choice 6
Worley Company has over-allocated overhead of $45,000 for the year ended
December 31, 2005. Before disposing of the over-allocated overhead, selected
December 31, 2005, balances from Worley's accounting records are as follows:

Revenues $1,200,000
Cost of Goods Sold 720,000
Inventories:
Materials Control 36,000
Work-in-Process Control 54,000
Finished Goods Control 90,000

Under Worley's accounting system, under-allocated or over-allocated overhead is


prorated to applicable inventories and Cost of Goods Sold based on their year-end
balances (before proration). In its 2005 income statement, Worley should report Cost
of Goods Sold of:
a. $682,500
b. $684,000
c. $756,000
d. $757,500

Multiple choice 7
Under generally accepted accounting principles, the appropriate approach for
disposing of under-allocated or over-allocated manufacturing overhead at the end of
the fiscal year:
a. is to write it off to Cost of Goods Sold.
b. is to prorate it to Work-in-Process Control, Finished Goods Control, and Cost of
Goods Sold.
c. is to restate the overhead rate and use this rate to restate the balances of Work-in-
Process Control, Finished Goods Control, and Cost of Goods Sold as well as the job
cost record of every job worked on during the year.
d. depends on the significance of the amount.

Cost Accounting – a Managerial Emphasis Page 2


Haigazian University
Chapter 4
Job Costing

Cost Accounting – a
Managerial Emphasis Page 3

Cost Accounting – a Managerial Emphasis Page 3


Haigazian University

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