lesson 2 joborder

8/13/2019 Lesson 2 Joborder

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NAME: ____________________________________________ DATE: ___________________________

TRUE-FALSE STATEMENTS

1. Cost accounting is primarily concerned with accumulating information about product costs.2. A job order cost system is most appropriate when a large volume of uniform products are produced.

3. A process cost accounting system is appropriate for similar products that are continuously mass produced.4. The perpetual inventory method cannot be used in a job order cost system.. A job order cost system and a process cost system are two alternative methods for valuing inventories.!. A job order cost system identifies costs with a particular job rather than with a set time period.". A company may use either a job order cost system or a process cost system# but not both.$. %aw &aterials 'nventory# (actory )abor# and &anufacturing *verhead are all control accounts in the

general ledger when a job order cost accounting system is used.+. Accumulating and assigning manufacturing costs are two important activities in a job order cost system.

1,. %ecording the ac-uisition of raw materials is a part of accumulating manufacturing costs.11. &anufacturing costs are generally incurred in one period and recorded in a subse-uent period.12. The urchases account is credited for all raw materials purchase returns and allowances.13. The stores ledger cards are the subsidiary ledger for %aw &aterials 'nventory control account in the

general ledger.14. /hen raw materials are purchased# the /or0 in rocess 'nventory account is debited.1. (actory labor should be assigned to selling and administrative epenses on a proportionate basis.1!. (ringe benefits and payroll taes associated with factory wor0ers should be accumulated as a part of

(actory )abor.1". ob order cost sheets constitute the subsidiary ledger of the control account /or0 'n rocess 'nventory.1$. 'n a job order cost system# each entry to the /or0 'n rocess 'nventory account should be accompanied

by a posting to one or more job cost sheets.1+. irect materials re-uisitioned from the storeroom should be charged to the /or0 'n rocess 'nventory

account and the job cost sheets for the individual jobs on which the materials were used.2,. &anufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are

incurred.21. There should be a separate job cost sheet for each job.22. Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific

job.23. The formula for the predetermined overhead rate is estimated annual overhead costs divided by an

estimated activity base.24. Actual manufacturing overhead costs should be charged to the /or0 in rocess 'nventory account as they

are incurred.2. A good system of internal control re-uires that the job order cost sheet be destroyed as soon as the job is

complete.2!. (inished oods 'nventory is charged for the cost of jobs completed during a period.2". /hen goods are sold# the Cost of oods 5old account is debited and /or0 in rocess 'nventory account

is credited.2$. Total manufacturing costs for a period consists of the costs of direct materials used# the cost of direct

labor incurred# and the manufacturing overhead applied during the period.2+. *verapplied overhead means that actual manufacturing overhead costs were greater than the

manufacturing overhead costs applied to jobs.3,. 'f monthly financial statements are prepared# underapplied overhead is shown as a prepaid epense on the

balance sheet.31. A cost accounting system consists of manufacturing cost accounts that are fully integrated into the general

ledger of a company.32. The cost of raw materials purchased is credited to %aw &aterials 'nventory when materials are received.33. %e-uisitions for direct materials are posted daily to the individual job cost sheets.34. The predetermined overhead rate is based on the relationship between estimated annual overhead costs

and epected annual operating activity epressed in terms of a common activity base.3. At the end of the year# underapplied overhead is usually credited to Cost of oods 5old.

MULTIPLE CHOICE QUESTIONS: Encircle the correct letter

3!. /hich of the following is one of the components of cost accounting6a. 't involves measuring product costs.b. 't involves the determination of company profits.

1


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c. 't re-uires AA to be applied.d. 't re-uires cost minimi7ing principles.

3". A major purpose of cost accounting is toa. classify all costs as operating or nonoperating.b. measure# record# and report period costs.

c. provide information to stoc0holders for investment decisions.d. measure# record# and report product costs.

3$. The two basic types of cost accounting systems area. job order and job accumulation systems. b. job order and process cost systems.c. process cost and batch systems. d. job order and batch systems.

3+. A process cost system would most li0ely be used by a company that ma0esa. motion pictures. b. repairs to automobiles.c. brea0fast cereal. d. college graduation announcements.

4,. /hich of the following would be accounted for using a job order cost system6

a. The production of personal computers b. The production of automobilesc. The refining of petroleum d. The construction of a new campus building

41. rocess costing is used whena. the production process is continuous.b. production is aimed at filling a specific customer order.c. dissimilar products are involved.d. costs are to be assigned to specific jobs.

42. rocess costing is not used whena. similar goods are being produced.b. large volumes are produced.

c. jobs have distinguishing characteristics.d. a series of connected manufacturing processes is necessary.

43. An important feature of a job order cost system is that each joba. must be similar to previous jobs completed.b. has its own distinguishing characteristics.c. must be completed before a new job is accepted.d. consists of one unit of output.

44. As of ecember 31# 2,,$# 5tand 5till 'ndustries had 1#,, of raw materials inventory. At the beginningof 2,,$# there was 1#2,, of materials on hand. uring the year# the company purchased 1$3#,,, ofmaterials8 however# it paid for only 1"#,,. 9ow much inventory was re-uisitioned for use on jobs

during 2,,$6a. 1"#2,, b. 1$2#",, c. 1$3#3,, d. 1"#$,,

4. The flow of costs in a job order cost systema. involves accumulating manufacturing costs incurred and assigning the accumulated costs to wor0

done.b. cannot be measured until all jobs are complete.c. measures product costs for a set time period.d. generally follows a )'(* cost flow assumption.

4!. 'n a job order cost accounting system# the %aw &aterials 'nventory account isa. an epense. b. a control account. c. not used. d. a period cost.

4". /hen a job is completed and all costs have been accumulated on a job cost sheet# the journal entry thatshould be made is

a. (inished oods 'nventoryirect &aterialsirect )abor&anufacturing *verhead


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b. /or0 'n rocess 'nventoryirect &aterialsirect )abor&anufacturing *verhead

c. %aw &aterials 'nventory/or0 'n rocess 'nventory

d. (inished oods 'nventory/or0 'n rocess 'nventory

4$. The two major steps in the flow of costs area. allocating and assigning. b. ac-uiring and accumulating.c. accumulating and assigning. d. accumulating and amorti7ing.

4+. The %aw &aterials 'nventory account isa. a subsidiary account.b. debited for invoice costs and freight costs chargeable to the purchaser.c. debited for purchase discounts ta0en.

d. debited for purchase returns and allowances.

,. %ecords of individual items of raw materials would notbe maintaineda. electronically. b. manually.c. on store ledger cards. d. in the %aw &aterials 'nventory account.

1. Cost of raw materials is debited to %aw &aterials 'nventory when thea. materials are ordered. b. materials are received.c. materials are put into production. d. bill for the materials is paid.

2. %aw &aterials 'nventory records are also referred to asa. the %aw &aterials control account. b. the store ledger cards.

c. the purchases journal. d. periodic inventory records.

3. After all postings have been completed# the sum of the balances in the raw materials subsidiary ledgershould e-ual thea. balance in the %aw &aterials 'nventory control account.b. cost of materials charged to /or0 in rocess 'nventory.c. cost of materials purchased.d. cost of materials placed into production.

4. (actory labor costsa. are accumulated in a control account. b. do not include pension costs.c. include vacation pay. d. are based on wor0ers: net pay.

. (actory )abor is a;n

(actory?ross wages 1+#,,,(actory?@et wages 1!,#,,,mployer ayroll Taes ayable 2#,,,

The entry to record the cost of factory labor and the associated payroll ta epense will include a debit to(actory )abor fora. 22,#,,,. b. 1+#,,,. c. 1$#,,,. d. 1",#,,,.

". (actory labor costsa. accumulate in advance of utili7ation.b. accumulate in a control account.c. include sic0 pay earned by factory wor0ers.d. accumulate in the (actory )abor pense account.


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$. /hich of the following is nota control account6a. &anufacturing *verhead b. (actory )abor c. Accounts %eceivable d. %aw &aterials 'nventory

+. &anufacturing *verhead would nothave a subsidiary account fora. utilities. b. property taes. c. insurance. d. raw materials inventory.

!,. The entry to record the ac-uisition of raw materials on account isa. /or0 in rocess 'nventory

Accounts ayable

b. &anufacturing *verhead%aw &aterials 'nventoryAccounts ayable

c. Accounts ayable%aw &aterials 'nventory

d. %aw &aterials 'nventoryAccounts ayable

!1. /hich one of the following best describes a job cost sheet6a. 't is a form used to record the costs chargeable to a specific job and to determine the total and unit

costs of the completed job.b. 't is used to trac0 manufacturing overhead costs to specific jobs.c. 't is used by management to understand how direct costs affect profitability.d. 't is a daily form that management uses for trac0ing wor0er productivity on which employee raises

are based.

!2. ob cost sheets constitute the subsidiary ledger for thea. (inished oods 'nventory account. b. Cost of oods 5old account.c. /or0 'n rocess 'nventory account. d. Cost of oods &anufactured account.

!3. A materials re-uisition slip showed that direct materials re-uested were 3#,,, and indirect materialsre-uested were +#,,,. The entry to record the transfer of materials from the storeroom is

a. /or0 'n rocess 'nventory............................................................ 3#,,,%aw &aterials 'nventory..................................................... 3#,,,

b. irect &aterials............................................................................. 3#,,,'ndirect &aterials.......................................................................... +#,,,

/or0 in rocess 'nventory.................................................. !2#,,,

c. &anufacturing *verhead............................................................... !2#,,,%aw &aterials 'nventory..................................................... !2#,,,

d. /or0 'n rocess 'nventory............................................................ 3#,,,&anufacturing *verhead............................................................... +#,,,

%aw &aterials 'nventory..................................................... !2#,,,

!4. The job cost sheet does not showa. costs chargeable to a specific job. b. the total costs of a completed job.c. the unit cost of a completed job. d. the cost of goods sold.

!. Bnder an effective system of internal control# the authori7ation for issuing materials is madea. orally.b. on a prenumbered materials re-uisition slip.c. by the accounting department.d. by anyone on the production line.

!!. A copy of the materials re-uisition slipa. is routed to the treasurers office for payment.b. becomes the subsidiary ledger for the /or0 in rocess 'nventory.c. can be used as a subsidiary ledger for %aw &aterials 'nventory.d. is retained by the storeroom# and the original is sent to accounting.


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!". &aterials re-uisition slips are costeda. by production supervisors.b. by factory personnel who wor0 on the production line.c. after the goods have been sold.d. using any of the inventory costing methods.

!$. osting to control accounts in a costing system are madea. monthly. b. daily. c. annually. d. semiDannually.

!+. /hich one of the following should be e-ual to the balance of the wor0 in process inventory account at theend of the period6a. The total of the amounts transferred from raw materials for the current periodb. The sum of the costs shown on the job cost sheets of unfinished jobsc. The total of manufacturing overhead applied to wor0 in process for the periodd. The total manufacturing costs for the period

",. /hich of the following shows entries only to control accounts6

a. (actory )abor

/ages ayable

b. /or0 in rocess(actory )abor

%aw &aterials 'nventory/ages ayable

c. /or0 in rocess&anufacturing *verhead

%aw &aterials 'nventory

d. (actory )abor%aw &aterials 'nventory

Accounts ayable

/ages ayable

"1. A time tic0et does not indicate thea. employees name.b. account to be charged.c. number of personal eemptions claimed by the employee.d. job number.

"2. /hich one of the following is a source document that impacts the job cost sheet6a. %aw materials receiving slips b. &aterials purchase ordersc. )abor time tic0ets d. (inished goods shipping documents

"3. Time tic0ets should be approved bya. the audit committee. b. coDwor0ers.c. the employees supervisor. d. the payroll department.

"4. 'f the entry to assign factory labor showed only a debit to /or0 'n rocess 'nventory# then all labor costswerea. direct labor. b. indirect labor. c. overtime related. d. regular hours.

". The principal accounting record used in assigning costs to jobs isa. a job cost sheet.b. the cost of goods manufactured schedule.c. the &anufacturing *verhead control account.

d. the store ledger cards.

"!. The following information is available for completed ob @o. 4,2> irect materials# !,#,,,8 direct labor#+,#,,,8 manufacturing overhead applied# 4#,,,8 units produced# #,,, units8 units sold# 4#,,, units.The cost of the finished goods on hand from this job isa. 3,#,,,. b. 1+#,,,. c. 3+#,,,. d. 1!#,,,.


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"". 5portly# 'nc. completed ob @o. E14 during 2,,$. The job cost sheet listed the following>

irect materials 33#,,,irect labor 1$#,,,&anufacturing overhead applied 12#,,,Bnits produced 3#,,, units

Bnits sold 1#$,, units9ow much is the cost of the finished goods on hand from this job6a. !3#,,, b. 3"#$,, c. 2#2,, d. 3,#!,,

"$. &adison 'nc. uses job order costing for its brand new line of sewing machines. The cost incurred forproduction during 2,,$ totaled 12#,,, of materials# !#,,, of direct labor costs# and 4#,,, ofmanufacturing overhead applied. The company ships all goods as soon as they are completed whichresults in no finished goods inventory on hand at the end of any year. Eeginning wor0 in process totaled1,#,,,# and the ending balance is !#,,,. uring the year# the company completed 4, machines. 9owmuch is the cost per machine6a. 4, b. !, c. , d. $,,

"+. As of ecember 31# 2,,$# @ilsen 'ndustries had 2#,,, of raw materials inventory. At the beginning of2,,$# there was 1#!,, of materials on hand. uring the year# the company purchased 244#,,, ofmaterials8 however it paid for only 234#,,,. 9ow much inventory was re-uisitioned for use on jobsduring 2,,$6a. 244#4,, b. 234#4,, c. 233#!,, d. 243#!,,

$,. Cost of goods manufactured e-uals 44#,,, for 2,,$. (inished goods inventory is 2#,,, at thebeginning of the year and F#,, at the end of the year. Eeginning and ending wor0 in process for 2,,$are 4#,,, and #,,,# respectively. 9ow much is cost of goods sold for the year6a. 4!#,, b. 42#,,, c. 4,#,, d. 4"#,,

$1. A company epected its annual overhead costs to be !,,#,,, and direct labor costs to be 1#,,,#,,,.

Actual overhead was $,#,,,# and actual labor costs totaled 1#1,,#,,,. 9ow much is the company:spredetermined overhead rate to the nearest cent6a. ,.$ b. ,.3 c. ,.!, d. ,.

$2. Ge0te0# 'nc. thin0s machine hours is the best activity base for its manufacturing overhead. The estimate ofannual overhead costs for its jobs was !1#,,,. The company used 1#,,, hours of processing on ob @o.E12 during the period and incurred overhead costs totaling !3,#,,,. The budgeted machine hours forthe year totaled 2,#,,,. 9ow much overhead should be applied to ob @o. E126a. !3, b. 3,#", c. 31#,, d. !1

$3. 9ill &fg. provided the following information from its accounting records for 2,,$>

pected production 3,#,,, labor hours

Actual production 2$#,,, labor hoursEudgeted overhead +,,#,,,Actual overhead $",#,,,

9ow much is the overhead application rate if 9ill bases the rate on direct labor hours6a. 31.," per hour b. 3,.,, per hour c. 2+.,, per hour d. 2$.,, per hour

$4. =inney Company applies overhead on the basis of 1,H of direct labor cost. ob @o. 1"! is charged with,#,,, of direct materials costs and !,#,,, of manufacturing overhead. The total manufacturing costsfor ob @o. 1"! isa. 11,#,,,. b. 2,,#,,,. c. 1,#,,,. d. 13#,,,.

$. %edman Company manufactures customi7ed des0s. The following pertains to ob @o. +"$>irect materials used !#3,,irect labor hours wor0ed 3,,irect labor rate per hour 12.,,&achine hours used 2,,Applied factory overhead rate per machine hour 22.,,


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/hat is the total manufacturing cost for ob @o. +"$6a. 13#1,, b. 14#3,, c. 1#3,, d. 1!#,,

$!. 9enson Company applies overhead on the basis of 12,H of direct labor cost. ob @o. 1+, is charged with!,#,,, of direct materials costs and +,#,,, of manufacturing overhead. The total manufacturing costsfor ob @o. 1+, is

a. 1,#,,,. b. 2$#,,,. c. 1!2#,,,. d. 22#,,,.

$". @orman Company manufactures customi7ed des0s. The following pertains to ob @o. +3>

irect materials used $#4,,irect labor hours wor0ed 3,,irect labor rate per hour 1!.,,&achine hours used 2,,Applied factory overhead rate per machine hour 3,.,,

/hat is the total manufacturing cost for ob @o. +36a. 1"#!,, b. 1+#2,, c. 2,#!,, d. 22#2,,

$$. *liver Company provided the following information from its accounting records for 2,,$>

pected production !,#,,, labor hoursActual production !#,,, labor hoursEudgeted overhead 1#,,#,,,Actual overhead 1#4,#,,,

9ow much is the overhead application rate if *liver Company bases it on direct labor hours6a. 2.,, per hour b. 2!."+ per hour c. 2.$+ per hour d. 24.1" per hour

$+. The labor costs that have been identified as indirect labor should be charged toa. manufacturing overhead. b. direct labor.c. the individual jobs wor0ed on. d. salary epense.

+,. &anufacturing overhead is applied to each joba. at the time when the overhead cost is incurred.b. by means of a predetermined overhead rate.c. at the end of the year when actual costs are 0nown.d. only if the overhead costs can be directly traced to that job.

+1. The predetermined overhead rate is based on the relationship betweena. estimated annual costs and actual activity.b. estimated annual costs and epected annual activity.c. actual monthly costs and actual annual activity.d. estimated monthly costs and actual monthly activity.

+2. The predetermined overhead rate isa. determined on a moving average basis throughout the year.b. not calculated until actual overhead costs are incurred.c. determined at the beginning of the year.d. determined at the end of the current year.

+3. 'n calculating a predetermined overhead rate# a recent trend in automated manufacturing operations is tochoose an activity base related toa. direct labor hours. b. indirect labor pesos.c. machine hours. d. raw materials pesos.

+4. 'f annual overhead costs are epected to be ",#,,, and direct labor costs are epected to be1#,,,#,,,# thena. 1.33 is the predetermined overhead rate.b. for every peso of manufacturing overhead# " centavos of direct labor will be assigned.c. for every peso of direct labor# " centavos of manufacturing overhead will be assigned.d. a predetermined overhead rate cannot be determined.


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+. *verhead application is recorded with aa. credit to /or0 in rocess 'nventory. b. credit to &anufacturing *verhead.c. debit to &anufacturing *verhead. d. credit to job cost sheets.

+!. &anufacturing overhead applied is added to direct labor incurred and to what other item to e-ual totalmanufacturing costs for the period6

a. oods available for sale b. %aw materials purchasedc. /or0 in process d. irect materials used

+". At the beginning of the year# &onroe Company estimates annual overhead costs to be 1#,,#,,, andthat 3,,#,,, machine hours will be operated. Bsing machine hours as a base# the amount of overheadapplied during the year if actual machine hours for the year was 31#,,, hours isa. 1#,,#,,,. b. 1#42$#"2. c. 1#,,#,,,. d. 1#"#,,,.

+$. Cost of goods sold is obtained froma. analysis of all the control accounts in the cost system.b. the finished goods inventory records.c. the wor0 in process inventory records.

d. the %aw &aterials 'nventory control account.

++. /hen determining costs of jobs# how does a company account for indirect materials6a. 't is added to wor0 in process as used.b. 't remains part of raw materials inventory.c. 't is transferred out of raw materials into manufacturing overhead when used.d. 't is transferred out of raw materials into wor0 in process as used.

1,,. 'n a job order cost system# a credit to &anufacturing *verhead will be accompanied by a debit toa. Cost of oods &anufactured. b. (inished oods 'nventory.c. /or0 in rocess 'nventory. d. %aw &aterials 'nventory.

1,1. uring 2,,$# )awson &anufacturing epected ob @o. 2! to cost !,,#,,, of overhead# 1#,,,#,,, ofmaterials# and 4,,#,,, in labor. )awson applied overhead based on direct labor cost. Actual productionre-uired an overhead cost of !,#,,,# 1#1,,#,,, in materials used# and 44,#,,, in labor. All of thegoods were completed. /hat amount was transferred to (inished oods6a. 2#,,,#,,, b. 2#1,,#,,, c. 2#14,#,,, d. 2#2,,#,,,

1,2. ebits to /or0 in rocess 'nventory are accompanied by a credit to all but which one of the followingaccounts6a. %aw &aterials 'nventory b. (actory )abor c. &anufacturing *verhead d. Cost of oods 5old

1,3. /hich of the following is notviewed as part of accumulating manufacturing costs in a job order cost

system6a. Cost of goods sold is recogni7ed b. %aw materials are purchasedc. (actory labor is incurred d. &anufacturing overhead is incurred

1,4. /hich of the following is notviewed as part of assigning manufacturing costs in a job order cost system6a. &anufacturing overhead is applied b. %aw materials are usedc. &anufacturing overhead is incurred d. Completed goods are recogni7ed

1,. 'n determining total manufacturing costs on the cost of goods manufactured schedule#a. beginning wor0 in process inventory should have a 7ero balance.b. actual manufacturing overhead costs appear as a deduction.c. manufacturing overhead applied is added to direct materials and direct labor.

d. ending wor0 in process inventory is deducted from beginning wor0 in process inventory.

Use the following information for questions 106107.

Eater Company developed the following data for the current year>

Eeginning wor0 in process inventory 1,#,,,irect materials used +,#,,,


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Actual overhead 1$,#,,,*verhead applied 13#,,,Cost of goods manufactured 1!#,,,Total manufacturing costs 4,#,,,

1,!. Eater Companys direct labor cost for the year is

a. 4#,,,. b. 22#,,,. c. 13#,,,. d. 1$,#,,,.

1,". Eater Companys ending wor0 in process inventory isa. 43#,,,. b. 3,,#,,,. c. 2$#,,,. d. 13#,,,.

1,$. %ussell &anufacturing Company developed the following data>

Eeginning wor0 in process inventory 1$,#,,,irect materials used 14,#,,,Actual overhead 22,#,,,*verhead applied 1!,#,,,Cost of goods manufactured 24,#,,,nding wor0 in process 3,,#,,,

%ussell &anufacturing Companys total manufacturing costs for the period isa. 3$,#,,,. b. 3!,#,,,. c. 2!,#,,,. d. cannot be determined

1,+. /hich of the following is notused in assigning manufacturing costs to wor0 in process inventory6

a. Actual manufacturing overhead b. Time tic0etsc. &aterials re-uisitions d. redetermined overhead rate

11,. *n the cost of goods manufactured schedule# the cost of goods manufactured agrees with thea. balance of (inished oods 'nventory at the end of the period.b. total debits to /or0 in rocess 'nventory during the period.c. amount transferred from /or0 in rocess 'nventory to (inished oods during the period.

d. debits to Cost of oods 5old during the period.

111. annon Company had the following information at ecember 31>

(inished goods inventory# anuary 1 ,#,,,(inished goods inventory# ecember 31 1,#,,,

'f the cost of goods manufactured during the year amounted to 2#1,,#,,, and annual sales were2#",#,,,# the amount of gross profit for the year isa. !,#,,,. b. 2#,,,#,,,. c. ",#,,,. d. ,#,,,.

112. Gernon Company incurred direct materials costs of ,,#,,, during the year. &anufacturing overheadapplied was +,#,,, and is applied at the rate of !,H of direct labor costs. Gernon Company:s totalmanufacturing costs for the year wasa. "4,#,,,. b. !44#,,,. c. +,#,,,. d. +44#,,,.

Use the following information for questions 113114.

ayne Company developed the following data for the current year>

Eeginning wor0 in process inventory 34#,,,irect materials used 2#,,,Actual overhead 44#,,,*verhead applied 4!#,,,Cost of goods manufactured 22#,,,Total manufacturing costs 214#,,,

113. 9ow much is ayne Companys direct labor cost for the year6a. 12"#,,, b. 1,#,,, c. 11!#,,, d. $2#,,,

114. 9ow much is ayne Companys ending wor0 in process inventory for the year6a. 23#,,, b. 121#,,, c. 21#,,, d. +3#,,,


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11. Chmelar &anufacturing Company developed the following data>

Eeginning wor0 in process inventory 2,#,,,irect materials used 12,#,,,Actual overhead 14,#,,,*verhead applied 13#,,,

Cost of goods manufactured 32,#,,,nding wor0 in process 1#,,,

9ow much are total manufacturing costs for the period6a. 3+#,,, b. 31#,,, c. 2"#,,, d. 3,#,,,

11!. Earger Company had the following information at ecember 31>

(inished goods inventory# anuary 1 3,#,,,(inished goods inventory# ecember 31 42#,,,

'f the cost of goods manufactured during the year amounted to !!#,,, and annual sales were ++$#,,,#how much is the amount of gross profit for the year6a. 333#,,, b. 3,3#,,, c. !3#,,, d. 34#,,,

11". Chin Company incurred direct materials costs of 3,,#,,, during the year. &anufacturing overheadapplied was 2$,#,,, and is applied based on direct labor costs. The predetermined overhead rate is ",H.9ow much are Chin Company:s total manufacturing costs for the year6a. ""!#,,, b. ",,#,,, c. $,#,,, d. +$,#,,,

11$. uring 2,,$# enson &anufacturing epected ob @o. 1 to cost 4,#,,, of overhead# ",#,,, ofmaterials# and 3,,#,,, in labor. enson applied overhead based on direct labor cost. Actual productionre-uired an overhead cost of 42,#,,,# $2#,,, in materials used# and 33,#,,, in labor. All of thegoods were completed. /hat amount was transferred to (inished oods6a. 1#!,#,,, b. 1#!,#,,, c. 1#,,#,,, d. 1#"#,,,

11+. uring 2,,$# 5pec0 &anufacturing epected ob @o. + to cost 4,#,,, of overhead# ",#,,, ofmaterials# and 3,,#,,, in labor. 5pec0 applied overhead based on direct labor cost. Actual productionre-uired an overhead cost of 42,#,,,# $2#,,, in materials used# and 33,#,,, in labor. All of thegoods were completed. 9ow much is the amount of overD or underapplied overhead6a. 3,#,,, underapplied b. 3,#,,, overappliedc. "#,,, underapplied d. "#,,, overapplied

12,. =imble Company applies overhead on the basis of machine hours. iven the following data# computeoverhead applied and the underD or overapplication of overhead for the period>

stimated annual overhead cost 1#2,,#,,,Actual annual overhead cost 1#14#,,,stimated machine hours 3,,#,,,

Actual machine hours 2$,#,,,

a. 1#12,#,,, applied and 2#,,, overappliedb. 1#2,,#,,, applied and 2#,,, overappliedc. 1#12,#,,, applied and 2#,,, underappliedd. 1#14#,,, applied and neither underD nor overapplied

121. Earnes Company applies overhead on the basis of machine hours. iven the following data# computeoverhead applied and the underD or overapplication of overhead for the period>

stimated annual overhead cost 1#,,#,,,Actual annual overhead cost 1#43,#,,,

stimated machine hours 3"#,,,Actual machine hours 3,#,,,

a. 1#4,,#,,, applied and 3,#,,, overappliedb. 1#,,#,,, applied and 3,#,,, overappliedc. 1#4,,#,,, applied and 3,#,,, underappliedd. 1#43,#,,, applied and neither underD nor overapplied


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122. A company assigned overhead to wor0 in process. At year end# what does the amount of overappliedoverhead mean6a. The overhead assigned to wor0 in process is greater than the estimated overhead costs.b. The overhead assigned to wor0 in process is less than the estimated overhead costs.c. The overhead assigned to wor0 in process is less than the actual overhead.d. The overhead assigned to wor0 in process is greater than the overhead incurred.

123. 'f the &anufacturing *verhead account has a debit balance at the end of a period# it means thata. actual overhead costs were less than overhead costs applied to jobs.b. actual overhead costs were greater than overhead costs applied to jobs.c. actual overhead costs were e-ual to overhead costs applied to jobs.d. no jobs have been completed.

124. 'f the manufacturing overhead costs applied to jobs wor0ed on were greater than the actual manufacturingcosts incurred during a period# overhead is said to bea. underapplied. b. overapplied. c. in error. d. prepaid.

12. At the end of the year# any balance in the &anufacturing *verhead account is generally eliminated by

adjustinga. /or0 'n rocess 'nventory. b. (inished oods 'nventory.c. Cost of oods 5old. d. %aw &aterials 'nventory.

12!. 'f &anufacturing *verhead has a credit balance at the end of the period# thena. overhead has been underapplied.b. the overhead assigned to /or0 in rocess 'nventory is less than the overhead incurred.c. overhead has been overapplied.d. management must ta0e corrective action.

12". The &anufacturing *verhead account shows debits of 3,#,,,# 24#,,,# and 2$#,,, and one credit for$!#,,,. Eased on this information# manufacturing overhead

a. has been overapplied. b. has been underapplied.c. has not been applied. d. shows a 7ero balance.

12$. /hen monthly financial statements are prepared# a difference between actual overhead and overheadapplied will appear ona. the balance sheet. b. the income statement.c. the statement of stoc0holders e-uity. d. none of the financial statements.

12+. /hen monthly financial statements are prepared# overapplied overhead will appear asa. unearned revenue.b. a current asset.c. a loss on the income statement under I*ther penses and )osses.I

d. miscellaneous epense.

13,. /hen monthly financial statements are prepared# underapplied overhead will appear asa. unearned revenue.b. a current asset.c. I*ther %evenues and ains#I on the income statement.d. a reduction to cost of goods sold.

131. 'f manufacturing overhead has been underapplied during the year# the adjusting entry at the end of theyear will show aa. debit to &anufacturing *verhead. b. credit to Cost of oods 5old.c. debit to /or0 in rocess 'nventory. d. debit to Cost of oods 5old.

132. 'f manufacturing overhead has been overapplied during the year# the adjusting entry at the end of the yearwill show aa. debit to &anufacturing *verhead. b. credit to (inished oods 'nventoryc. debit to Cost of oods 5old. d. credit to /or0 in rocess 'nventory.


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133. The eistence of underD or overapplied overhead at the end of the montha. is epected to be offset in future months.b. indicates that an error has been made.c. re-uires a retroactive adjustment to the cost of all jobs completed.d. is written off as a bad estimate epense.

134. Conceptually# any underD or overapplied overhead at the end of the year should be allocated among all ofthe following ecepta. cost of goods sold. b. ending wor0 in process inventory.c. ending raw materials inventory. d. ending finished goods inventory.

13. 'f# at the end of the year# &anufacturing *verhead has been overapplied# it means thata. actual overhead costs were greater than the overhead assigned to jobs.b. actual overhead costs were less than the overhead assigned to jobs.c. overhead has not been applied to jobs still in process.d. cost of goods will have to be increased by the amount of the overapplied overhead.

13!. A process cost system would be used for all of the following exceptthe

a. manufacture of cereal. b. refining of petroleum.c. printing of wedding invitations. d. production of automobiles.

13". 'n a job order cost system# it would be correct in recording the purchase of raw materials to debita. /or0 in rocess 'nventory.b. /or0 in rocess and &anufacturing *verhead.c. %aw &aterials 'nventory.d. (inished oods 'nventory.

13$. 'n a manufacturing company# the cost of factory labor consists of all of the following excepta. employer payroll taes. b. fringe benefits incurred by the employer.c. net earnings of factory wor0ers. d. gross earnings of factory wor0ers.

13+. /hich of the following is nota control account6a. %aw &aterials 'nventory b. (actory )aborc. &anufacturing *verhead d. All of these are control accounts.

14,. /hen the company assigns factory labor costs to jobs# the direct labor cost is debited toa. irect )abor. b. (actory )abor.c. &anufacturing *verhead. d. /or0 in rocess 'nventory.

141. innah Company applies overhead on the basis of 2,,H of direct labor cost. ob @o. ,1 is charged with!,#,,, of direct materials costs and $,#,,, of manufacturing overhead. The total manufacturing costsfor ob @o. ,1 is

a. 14,#,,,. b. 22,#,,,. c. 1$,#,,,. d. 2,,#,,,.

142. Companies assign &anufacturing overhead to wor0 in process on an estimated basis through the use ofa;n

lesson 2 joborder

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