Job costing information is used ________.
A) to determine target customers
B) to calculate the percentage of completion
C) for internal financial reporting
D) to enhance public relations
C. for internal financial reporting
Product costing information will include ________.
A) to increase profits
B) to increase sales and image of the company
C) for cost management
D) for efficient human resource management
C. for cost management
A ________ is a grouping of individual indirect cost items.
A) cost allocation base
B) cost assignment
C) cost pool
D) job-costing system
C cost pool
Each indirect-cost pool of a manufacturing firm ________.
A) utilizes a separate cost-allocation rate
B) is a subset of total direct costs
C) relates to multiple cost centres
D) utilizes the same cost-allocation rate for all costs incurred
A. utilizes a separate cost-allocation rate
Direct costs ________.
A) are anything for which a measurement of costs is desired
B) are costs related to a particular cost object that can be traced to that cost object in a cost-effective manner
C) focus specifically on the costing needs of the CFO
D)
B. are costs related to a particular cost object that can be traced to that cost object in a cost-effective manner
In a costing system, ________.
A) cost tracing allocates indirect costs
B) cost allocation assigns direct costs
C) a cost-allocation base can be either financial or nonfinancial
D) a cost object should be a product and not a department or a geographic ter
C. a cost-allocation base can be either financial or non-financial
Assigning direct costs to a cost object is called ________.
A) cost allocation
B) cost assignment
C) cost pooling
D) cost tracing
D. Cost tracing
________ is the process of distributing indirect costs to products.
A) Cost allocation
B) Job cost recording
C) Cost pooling
D) Cost tracing
A. cost allocation
A ________ links an indirect cost to a cost object.
A) cost-allocation base
B) cost pool
C) cost assignment
D) cost tracing
A. Cost-allocation base
Which of the following includes both traced direct costs and allocated indirect costs?
A) cost tracing
B) cost pools
C) cost assignments
D) cost allocations
C. Cost assignments
The cost allocation base ________.
A) is a grouping of individual indirect cost items
B) are costs related to a particular cost object that cannot be traced to that cost object in an economically feasible way
C) is anything for which a measurement of cost
D. is a systematic way to link an indirect cost or group of indirect costs to objects
Process costing is ________.
A) used to enhance employees' job satisfaction
B) used by businesses to price unique products or identical products produced in batches
C) used by businesses to price identical products
D) used by businesses when manufacturing
C. used by businesses to price identical products
Process costing ________.
A) allocates all product costs, including materials, and labor
B) results in different costs for different units produced
C) is commonly used by general contractors who construct custom-built homes
D) is used exclusively in manuf
A. allocated all product costs, including materials, and labor
Job costing is ________.
A) used by businesses to price identical products
B) used by businesses to price unique products for different jobs
C) used to calculate equivalent units
D) used to calculate the percentage of work completed
B used by businesses to price unique products to different jobs
Job costing ________.
A) cannot be used by the service industry
B) records the flow of costs for each product or service
C) allocates an equal amount of cost to each unit made during a time period
D) is used when each unit of output is identical
B. records the flow of costs for each product or service
Job-costing is likely to be used by________.
A) oil refining companies
B) advertising agencies
C) postal service companies
D) beverage production companies
B. advertising agencies
Which of the following differentiates job costing from process costing?
A) Job costing is used when each unit of output is identical, and process costing deals with unique products.
B) Job costing is used when each unit of output is identical and not prod
C) Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches.
Which of the following companies will use a process costing system?
A) an oil refining company
B) a manufacturer of ships
C) a custom watch manufacturer
D) an advertising firm
A. an oil refining company
Which of the following are reasons for using longer periods, such as a year, to calculate indirect cost rates?
A) shorter the period, the greater is the influence of seasonal patterns on the amount of costs
B) longer the period, the greater is the influen
A) shorter the period, the greater is the influence of seasonal patterns on the amount of costs
The actual indirect-cost rate is calculated by ________.
A) dividing actual total indirect costs by the actual total quantity of the cost-allocation base
B) multiplying actual total indirect costs by the actual total quantity of the cost-allocation base
C
A) dividing actual total indirect costs by the actual total quantity of the cost-allocation base
Actual costing is a costing system that traces direct costs to a cost object by ________.
A) using the budgeted direct cost rates times the budgeted quantities of direct-cost inputs
B) using the actual direct costs rates times the budgeted quantities of t
C) using the actual direct cost rates times the actual quantities of the direct-cost inputs
An example of a numerator reason for calculating annual indirect-cost rates includes ________.
A) fewer production workdays in a month
B) cost of raw materials purchased
C) higher snow-removal costs during the winter
D) the number of units produced
D) the number of units produced
An example of a denominator reason for calculating annual indirect-cost rates includes ________.
A) higher heating bills in the winter
B) semi-annual insurance payments in March and September
C) higher levels of output demanded during the fall months
D) A
C) higher levels of output demanded during the fall months
A job that shows low profitability may be the result of ________.
A) excessive usage of direct materials
B) inefficient direct manufacturing labor
C) overpricing the job
D) insurance claim of the damaged goods
B) inefficient direct manufacturing labor
For a given job the direct costs associated with the job are ________.
A) actual overhead
B) raw materials
C) sunk costs
D) fixed costs
B) raw materials
Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs:
A. Identify indirect costs
B. Compute the total cost of the job
C. Select cost-allocation bases
D. Compute the indirect cost rate
A) ACDB
B) CADB
B. CADB
The basic source document for direct manufacturing labor is the ________.
A) job-cost record
B) materials-requisition record
C) labor-time record
D) labor-requisition record
C) labor-time record
Problems with costing occur when ________.
A) incorrect job numbers are recorded on source documents
B) bar coding is used to record materials used on the job
C) a computer screen requests an employee number before that employee is able to work on informa
A) incorrect job numbers are recorded on source documents
The budgeted indirect-cost rate for each cost pool is computed as ________.
A) budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base
B) budgeted annual quantity of cost allocation base divided by budgeted annual indire
A) budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base
If indirect-cost rates are calculated monthly, distortions might occur because of ________.
A) rental costs paid monthly
B) property tax payments made in July and December
C) routine monthly preventive-maintenance costs that benefit future months
D) salar
B) property tax payments made in July and December
In a job-costing system, a manufacturing firm typically uses an indirect-cost rate to estimate the ________ allocated to a job.
A) direct materials
B) direct labor
C) manufacturing overhead costs
D) total costs
C) manufacturing overhead costs
) A job-cost sheet details the ________.
A) direct materials purchased and paid
B) direct labor costs incurred
C) indirect labor costs incurred
D) actual indirect overhead costs incurred
B) direct labor costs incurred
A job-cost record uses information from ________.
A) a materials-requisition record to record raw material purchases from suppliers
B) a materials-requisition report to record the type and quantity of item received in an order from a supplier
C) a labor-t
C) a labor-time card to record an employee's wage rate and hours spent on a particular job
Costs that are subject to short-run fluctuations for given jobs are ________.
A) actual costs
B) budgeted direct costs
C) budgeted indirect costs
D) normal costs
A) actual costs
An increase in direct labor cost per unit ________.
A) increases the fixed cost
B) increases profits
C) increases the variable cost
D) increases overhead costs
C) increases the variable cost
Managers and accountants collect most of the cost information that goes into their systems through ________.
A) an information databank
B) computer programs
C) source documents
D) time surveys
C) source documents
The budgeted indirect-cost rate is calculated ________.
A) at the beginning of the year
B) during the year
C) at the end of each quarter
D) at the end of the year
A) at the beginning of the year
The difference between actual costing and normal costing is ________.
A) normal costing uses actual quantities of direct-costs
B) actual costing uses actual quantities of direct-costs
C) normal costing uses budgeted indirect-costs
D) actual costing uses a
C) normal costing uses budgeted indirect-costs
Which of the following statements about normal costing is true?
A) Direct costs and indirect costs are traced using an actual rate.
B) Direct costs and indirect costs are traced using budgeted rates.
C) Direct costs are traced using a budgeted rate, and i
D) Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate.
When using a normal costing system, manufacturing overhead is allocated using the ________ manufacturing overhead rate and the ________ quantity of the allocation base.
A) budgeted; actual
B) budgeted; budgeted
C) actual; budgeted
D) actual; actual
A) budgeted; actual
Which of the following statements about actual costing is true?
A) Manufacturing costs of a job are available earlier under actual costing.
B) Corrective actions can be implemented sooner under actual costing.
C) Actual costing uses budgeted indirect-cost
D) Actual costing uses actual indirect-cost rates calculated annually.
When a normal costing system is used, clients using proportionately more full-time employees than trainees will ________.
A) be overbilled for actual resources used
B) be underbilled for actual resources used
C) be billed accurately for actual resources u
B) be underbilled for actual resources used
In a normal costing system, the Manufacturing Overhead Control account ________.
A) is increased by allocated manufacturing overhead
B) is credited with amounts transferred to Work-in-Process
C) is decreased by allocated manufacturing overhead
D) is debit
D) is debited with actual overhead costs
The Materials Control account is increased when ________.
A) direct materials are purchased
B) indirect materials are sold
C) materials are requisitioned for production
D) materials are converted to finished goods
A) direct materials are purchased
Which of the following is true of the Work-in-Process Control account?
A) It tracks all direct material purchases.
B) Its balance is the sum of amounts from all in-process individual job-cost records.
C) It is an expense account.
D) It tracks overhead cos
B) Its balance is the sum of amounts from all in-process individual job-cost records.
Which of the following general ledger accounts will have a subsidiary ledger account?
A) Cost of Goods Sold account
B) Work-in-Process Control account
C) Joe's Accounts Receivable subsidiary account
D) Operating Expenses account
B) Work-in-Process Control account
Which of the following increases (are debited to) the Work-in-Process Control account?
A) actual plant insurance costs
B) customer services costs
C) marketing expenses
D) direct manufacturing labor costs
D) direct manufacturing labor costs
When direct materials are requisitioned the ________ account is increased.
A) Manufacturing Overhead Control
B) Work-in-Process Control
C) Materials Control
D) Accounts Payable Control
B) Work-in-Process Control
Payment of the factory rent increases the ________.
A) Work-in-Process Control account
B) Manufacturing Overhead Control account
C) Cost of Goods Sold account
D) Factory Depreciation account
B) Manufacturing Overhead Control account
Which of the following is true of plant utility costs?
A) It increases the Materials Control account.
B) It increases the Manufacturing Overhead Control account.
C) It increases the Work-in-Process Control account.
D) It is a direct cost.
B) It increases the Manufacturing Overhead Control account.
Actual (rather than allocated) manufacturing overhead costs are first recorded in the ________.
A) Work-in-Process Control account
B) Finished Goods Control account
C) Manufacturing Overhead Control account
D) Cost of Goods Sold account
C) Manufacturing Overhead Control account
The ending balance in the Work-in-Process Control account represents the costs of all jobs that ________.
A) have not been completed
B) have been completed but not sold
C) have been completed and sold to customers
D) are reported on the income statement
A) have not been completed
For externally reported inventory costs, the Work-in-Process Control account is increased (debited) by ________.
A) marketing costs
B) allocated plant utility costs
C) the purchase costs of direct and indirect materials
D) customer-service costs
B) allocated plant utility costs
Which account is debited if materials costing $100,000 are sold?
A) Revenues account
B) Work-in-Process Control account
C) Materials Control account
D) Cost of Goods Sold account
D) Cost of Goods Sold account
Which account is credited if direct materials of $20,000 and indirect materials of $3,000 are sent to the manufacturing plant floor?
A) Manufacturing Overhead Control for $23,000
B) Work-in-Process Control for $23,000
C) Accounts Payable Control for $17,0
D) Materials Control for $23,000
Which of the following items is debited to the Work-in-Process account?
A) allocated manufacturing overhead
B) completed goods transferred out of the plant
C) accumulated depreciation on fixed assets
D) accounts receivable
A) allocated manufacturing overhead
Which account would be credited if the following labor wages were incurred in a furniture manufacturing company?
Assembly workers $20,000
Janitors $10,000
A) Work-in-Process Control, 30,000
B) Manufacturing Overhead Control, 30,000
C) Wages Payable Contro
C) Wages Payable Control, 30,000
Manufacturing overhead costs incurred for the month are:
Utilities $30,000
Depreciation on equipment $25,000
Repairs $20,000
Which account is debited assuming utilities and repairs were on account?
A) Manufacturing Overhead Control, 75,000
B) Utilities Ov
A) Manufacturing Overhead Control, 75,000
Which of the following statements regarding manufacturing overhead allocation is true?
A) It includes all manufacturing costs that cannot be directly traced to a product or service.
B) The costs can be grouped only as a single indirect-cost pool.
C) Total
A) It includes all manufacturing costs that cannot be directly traced to a product or service.
When a job is complete ________.
A) actual indirect manufacturing labor is excluded from the total cost of the job
B) Finished Goods Control is debited
C) the cost of the job is transferred to Manufacturing Overhead Control
D) it is reduced from Manufactu
B) Finished Goods Control is debited
During an accounting period, job costs are computed on an ongoing basis by the use of ________.
A) actual allocation rates
B) budgeted indirect-cost rates
C) overallocated indirect-cost rates
D) underallocated indirect-cost rates
B) budgeted indirect-cost rates
The advantage of using normal costing instead of actual costing is ________.
A) indirect costs are assigned at the end of the year when they are known
B) the job cost is more accurate under normal costing
C) indirect costs are assigned to a job on a timel
C) indirect costs are assigned to a job on a timely basis
The spreading of underallocated or overallocated overhead among ending work-in-process, finished goods, and cost of goods sold is called ________.
A) the adjusted allocation rate approach
B) the proration approach
C) the write-off of cost of goods sold ap
B) the proration approach
The method that restates all overhead entries in the general ledger and subsidiary ledgers using actual cost rates rather than budgeted cost rates is called ________.
A) the adjusted allocation rate approach
B) the proration approach
C) the write-off of c
A) the adjusted allocation rate approach
When the allocated amount of indirect costs are less than the actual amount, indirect costs have been ________.
A) within budget
B) overallocated
C) underallocated
D) perfectly allocated
C) underallocated
One reason indirect costs may be overapplied is because ________.
A) the actual allocation base quantity exceeds the budgeted quantity
B) budgeted indirect costs exceed actual indirect costs
C) requisitioned direct materials exceed budgeted material costs
B) budgeted indirect costs exceed actual indirect costs
The ________ adjusts individual job-cost records to account for underallocated or overallocated overhead.
A) adjusted allocation-rate
B) proration approach
C) write-off to cost of goods sold approach
D) weighted-average cost approach
A) adjusted allocation-rate
The adjusted allocation approach yields the benefits of ________.
A) timeliness and convenience of normal costing
B) allocating budgeted manufacturing overhead costs at the end of the year
C) write-off to the cost of goods sold approach
D) the proration a
A) timeliness and convenience of normal costing
The approach often used when dealing with small amounts of underallocated or overallocated overhead is the ________.
A) adjusted allocation-rate approach
B) proration approach
C) write-off to cost of goods sold approach
D) adjusted write-off approach
C) write-off to cost of goods sold approach
The ________ approach carries the underallocated or overallocated amounts to overhead accounts in the following year.
A) adjusted allocation-rate
B) proration
C) write-off to cost of goods sold
D) None of these answers are correct
D) None of these answers are correct
A company would use multiple cost-allocation bases ________.
A) if managers believed the benefits exceeded the additional costs of that costing system
B) because there is more than one way to allocate overhead
C) because this is a simpler approach than us
A) if managers believed the benefits exceeded the additional costs of that costing system
Filippucci Company used a budgeted indirect-cost rate for its manufacturing operations, the amount allocated ($200,000) is different from the actual amount incurred ($225,000).
Ending balances in the relevant accounts are:
Work-in-Process $ 10,000
Finishe
A) Cost of Goods Sold account
Which account is credited to write off the difference between allocated and actual overhead using the proration approach?
A) Work-in Process Control
B) Manufacturing Overhead Allocated
C) Finished Goods Control
D) Manufacturing Overhead Control
D) Manufacturing Overhead Control
In the service sector ________.
A) direct labor costs are always easy to trace to jobs
B) a budgeted direct-labor cost rate may be used to apply direct labor to jobs
C) normal costing may not be used
D) overhead is generally applied using an actual cost-a
B) a budgeted direct-labor cost rate may be used to apply direct labor to jobs
In the service sector, to achieve timely reporting on the profitability of an engagement, a company will use ________.
A) budgeted rates for all direct costs
B) budgeted rates for indirect costs
C) actual costing
D) budgeted rates for some direct costs an
D) budgeted rates for some direct costs and indirect costs
The budgeted direct-labor cost rate includes ________.
A) budgeted total costs in indirect cost pool
B) budgeted total direct-labor costs in the denominator
C) budgeted total direct-labor costs in the numerator
D) budgeted total direct-labor hours in the
C) budgeted total direct-labor costs in the numerator